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

Overview

These four funds all provide exposure to U.S. Treasury securities with monthly income, but they differ meaningfully in maturity profile and underlying strategy. BIL, SGOV, and SHY are all fixed-rate Treasury instruments spanning the money-market and short-duration segments; USFR stands apart as the only floating-rate offering. All four carry minimal credit risk and track broad Treasury indices, but their duration and yield characteristics reflect different points on the yield curve.

How they differ

The biggest structural difference is maturity: BIL and SGOV hold Treasury bills maturing in 0–3 months, while SHY holds 1–3 year Treasury bonds, and USFR holds floating-rate Treasury notes. This drives the second major distinction—interest-rate sensitivity. SHY carries a beta of 0.23, meaning it will experience price moves as rates shift; USFR's negative beta (-0.02) and the near-zero betas of BIL (0.06) and SGOV (-0.0029) imply minimal duration risk. The yield picture is compressed: SGOV leads at 3.54%, with USFR at 3.60%, BIL at 3.51%, and SHY at 3.49%—a narrow band reflecting the current flat-to-inverted yield curve. The third difference lies in cost and scale: SGOV has the lowest expense ratio at 0.07% and the largest AUM ($95.2B), while SHY and USFR both charge 0.15% and BIL charges 0.14%.

Who each is best for

• BIL: Fits investors seeking a simple, ultra-short-term Treasury vehicle with the longest track record (since 2007) and fractionally higher yield than SGOV at minimal extra cost.

• SGOV: Designed for investors prioritizing the lowest expense ratio and largest asset base, with a preference for 0–3 month Treasury exposure and straightforward index replication.

• SHY: Fits investors willing to accept modest duration risk (beta 0.23) to push further out the curve into 1–3 year maturities, accepting nearly identical yield in exchange for potential price appreciation if rates fall.

• USFR: Designed for investors seeking Treasury exposure with floating-rate mechanics that reset periodically, insulating the fund from duration risk if rates climb while offering yields comparable to fixed-rate peers.

Key risks to know

• Duration and rate-cycle risk in SHY: A beta of 0.23 means SHY's NAV will contract if Treasury yields rise and extend if yields fall. Over a 1–3 year holding period in a rising-rate environment, price depreciation could exceed the income gain.

• Reinvestment risk in BIL and SGOV: Holdings mature in 0–3 months. If rates decline, the fund will reinvest maturing principal into lower-yielding bills, compressing forward returns. Conversely, a steeper curve benefits holders.

• Floating-rate coupon reset timing in USFR: The fund's coupon resets based on Treasury floating-rate note structures, typically quarterly. There is a lag between Fed-rate changes and coupon resets, creating temporary yield drag during periods of rapid rate increases.

• Expense-ratio drag in a low-yield environment: If rates fall significantly, the 0.15% fees charged by SHY and USFR consume a larger share of total return. BIL and SGOV's lower fees (0.14% and 0.07%) offer modest protection in such scenarios.

• Basis risk in index tracking: All four funds track indices with small deviations. SGOV's newer inception date (2020) means less long-term performance history compared to SHY (2002) and BIL (2007), though all three track similar-quality Treasury indices.

Bottom line

If you value the lowest cost and largest scale, SGOV's 0.07% expense ratio and $95.2B AUM stand out; if you're comfortable with duration risk and want to capture a longer-maturity premium, SHY's 1–3 year positioning offers that trade-off at a competitive yield. USFR appeals to investors expecting rates to rise or plateau, since floating-rate resets prevent principal erosion; BIL serves as a simple, proven alternative to SGOV for money-market allocation. All four are backed by full U.S. government guarantee and carry negligible credit risk, but they solve different portfolio problems—choose based on your rate outlook and willingness to accept duration exposure. Past performance does not predict future results.