BIL vs SGOV vs SHY vs USFR: Which Is the Better Pick in 2026?

Overview

These four funds give you different ways to harvest yield from U.S. Treasury securities across the shortest end of the curve. BIL and SGOV both track Treasury bills maturing in 0–3 months; SHY extends that out to 1–3 years; USFR holds floating-rate Treasury notes that reprice regularly as short-term rates move. All four distribute monthly and carry minimal credit risk, but their duration and yield sources differ meaningfully.

How they differ

The sharpest divide is maturity: BIL and SGOV hold only bills (pure short-term), while SHY holds bonds with up to three years to maturity, giving it exposure to interest-rate risk. SGOV edges both bill funds on cost, charging 0.07% versus BIL's 0.14%, and holds $95.2B in assets—the largest of the four. SHY carries a 0.23 beta, meaning its price will move modestly when Treasury yields shift; BIL, SGOV, and USFR all have near-zero or slightly negative betas. USFR's floating-rate mechanism means its coupon resets regularly, insulating it from duration losses if rates rise further but also capping upside if they fall. Yields cluster tightly (3.53% to 3.61%), but the path to that yield differs: USFR and SHY collect a mix of price appreciation and coupon; BIL and SGOV are almost pure yield plays.

Who each is best for

BIL: Investors prioritizing simplicity and the longest track record—it's been running since 2007—and comfortable paying slightly higher fees for a fund benchmarked explicitly to bills rather than bonds.

SGOV: Fits investors who want the absolute lowest cost exposure to 0–3 month Treasuries and don't mind a shorter fund history; the 0.07% expense ratio is the cheapest in this group and the $95.2B in AUM signals deep liquidity.

SHY: Designed for investors willing to tolerate modest interest-rate sensitivity (0.23 beta) in exchange for a small duration cushion and a proven 20+ year fund history; holds appeal if you expect rates to hold steady or fall.

USFR: Suits investors who believe rates may stay elevated or move higher and want to capture the benefit of regular coupon repricing without locking in a fixed yield; best for those comfortable with a smaller AUM base ($17.3B).

Key risks to know

• Duration risk (SHY). With maturities extending to three years, SHY's net asset value will decline if Treasury yields rise and rise if yields fall. Its 0.23 beta is the only material duration sensitivity in this group—a 1% move in the 3-year yield could shift SHY's price by roughly 2–3%, while BIL and SGOV price virtually unchanged.

• Rate-reset timing (USFR). Floating-rate notes reprice on a schedule tied to Fed action and Treasury auction cycles. If you buy USFR just before a rate cut, your coupon won't adjust downward until the next reset; conversely, you miss out on price appreciation if rates fall sharply before the coupon resets.

• Yield compression if rates fall. All four funds' distributions depend on prevailing short-term yields. If the Fed cuts rates materially over the next 12 months, the 3.53–3.61% yields on offer today will compress, and so will future distributions. BIL and SGOV offer the least protection because bills reprice monthly; SHY and USFR have slightly longer maturities, offering marginally more stability.

• Expense-ratio trade-off at scale. SGOV's 0.07% fee saves roughly $3–4 per $10,000 invested per year compared to BIL's 0.14%, but BIL has a much longer operating history and larger ecosystem (nearly $48B in AUM).

Bottom line

If you're hunting the lowest cost entry to Treasury money-market exposure, SGOV's 0.07% fee and $95.2B in size make it the standout; if you want a bit more duration cushion against falling yields, SHY's 1–3 year bonds offer that in exchange for rate sensitivity. USFR appeals if you expect rates to remain elevated or rise, because its floating coupon won't lock you into today's yield. All four carry minimal credit risk and distribute monthly, so the choice hinges on your view of future rate movements and tolerance for price fluctuation. Past performance doesn't predict future results.