USFR vs SGOV vs BIL vs SHY: Which Treasury Cash Fund Yields More?

Overview

These four ETFs all track U.S. Treasury securities but with meaningfully different maturity profiles and interest-rate mechanics. BIL, SGOV, and SHY hold fixed-rate bills or bonds across a spectrum from zero to three years; USFR instead holds floating-rate Treasury notes that reprice at regular intervals. All four distribute monthly and carry minimal credit risk, but their sensitivity to rate moves and reinvestment dynamics differ sharply.

How they differ

The core split is between fixed-rate Treasuries and floating-rate ones. BIL and SGOV track 0-3 month bills (essentially cash), SHY extends to 1-3 year bonds (meaningful interest-rate sensitivity), and USFR holds floating-rate notes that reset periodically to current rates. BIL and SGOV are near-twins—both hold ultra-short bills with distribution rates around 3.6%, but SGOV is larger ($103B vs. $46.7B), cheaper (0.07% expense ratio vs. 0.14%), and slightly newer. SHY offers 8–10 basis points more yield (3.67% vs. 3.58–3.66%) but carries real duration risk (beta of 0.22, versus near-zero for the bills). USFR's 3.80% yield reflects its floating-rate structure and the typical premium for rate-reset mechanics; its beta of -0.02 indicates almost no correlation with broad market moves, a useful hedge property if rates stabilize or fall.

Who each is best for

• BIL: Fits investors seeking the simplest, most liquid ultra-short Treasury exposure with a long track record (17-year inception) and willingness to accept the higher 0.14% expense ratio in exchange for that stability.

• SGOV: Designed for investors prioritizing cost and scale—the 0.07% expense ratio and $103B in assets appeal to those building a core money-market or cash-reserve position with minimal drag.

• SHY: Matches investors comfortable with modest interest-rate sensitivity (a 1% rate move could shift NAV by roughly 1%) in exchange for meaningfully higher yield and a maturity ladder extending past three months.

• USFR: Fits allocators seeking a Treasury hedge against future rate declines or a portfolio anchor that provides yield without downside if rates stay elevated or rise—the negative beta and floating-rate reset protect principal in a rising-rate environment.

Key risks to know

• Bill/bond rollover timing: BIL and SGOV hold securities maturing within weeks to months. As yields fluctuate, reinvestment into fresh bills at materially different rates can compress or boost income—there's no way to "lock in" today's 3.6% yield beyond the next roll cycle.

• Duration risk in SHY: A beta of 0.22 and a 1-3 year maturity means SHY's NAV will move inversely with longer-term Treasury yields. If rates fall sharply, SHY will outperform the bills; if rates rise, it will lag—a non-trivial consideration over multi-month holding periods.

• Floating-rate coupon mechanics in USFR: Floating-rate notes reset at defined intervals (often quarterly or semi-annually). Between reset dates, a sudden rate spike leaves the coupon unchanged; conversely, if the Fed cuts rates, the next coupon will step down. The lag between market-rate moves and coupon adjustments introduces reinvestment uncertainty not present in bills.

• Expense ratio drag on small positions: At current yield levels (3.6–3.8%), the gap between BIL's 0.14% ratio and SGOV's 0.07% costs 7 basis points annually—roughly 2% of the yield. For accounts under $50,000, that friction is material; for larger positions, it's a rounding error.

Bottom line

All four are high-quality Treasury vehicles; the choice hinges on yield preference and rate-risk tolerance. If you want the lowest cost and don't mind accepting that your money is truly parked short-term, SGOV's scale and 0.07% fee stand out. If you can absorb modest duration risk and value a higher coupon, SHY's 1-3 year ladder delivers an extra 9 basis points. If you're hedging against further rate declines or prefer floating-rate economics, USFR offers a different risk profile. Past performance does not guarantee future results; all three distribution yields will reset as Treasury rates move.