Generated October 3, 2026.
Overview
BIL and SHY are both Treasury-focused ETFs that track short-dated U.S. government debt, but they differ fundamentally in maturity. BIL holds Treasury bills with maturities of one to three months, functioning as a cash-equivalent vehicle with minimal interest-rate sensitivity. SHY holds Treasury bonds with one- to three-year maturities, offering slightly higher yield in exchange for modest duration risk and price volatility.
How they differ
The most important difference is maturity structure. BIL's 1–3 month bills behave like money-market instruments with near-zero interest-rate risk; SHY's 1–3 year bonds carry measurable duration risk and will fluctuate in price as rates move. This shows up in beta: BIL's is 0.06, while SHY's is 0.22, reflecting SHY's greater sensitivity to rate changes. Yield is nearly identical—3.45% for BIL and 3.57% for SHY—because short-end Treasury rates are tightly correlated, though SHY's slightly higher payout reflects its longer duration. SHY is also larger by AUM ($26.2B versus $48.1B) and has been in existence longer, though both charge minimal expense ratios (0.1353% and 0.15%, a difference of 0.01%).
Who each is best for
BIL: Investors who want a cash-like parking place with modest yield pickup and virtually no interest-rate risk—suitable for emergency reserves, near-term spending buckets, or portions of a portfolio requiring maximum stability.
SHY: Investors willing to accept modest price volatility and duration exposure in exchange for a slightly longer return-collection window and the opportunity to benefit from a steepening yield curve or declining rates.
Key risks to know
- Duration risk (SHY only). SHY's one- to three-year maturity profile means its net asset value will decline if Treasury yields rise materially. BIL has minimal rate sensitivity and will not experience meaningful mark-to-market losses from rate moves.
- Reinvestment timing (BIL). Bills mature constantly and cash is reinvested into new issues. In a falling-rate environment, maturing proceeds roll into lower-yielding bills, which may compress returns over time.
- Yield compression in low-rate regimes. Both funds' distributions will move lower if the Fed lowers short-term rates. BIL is more sensitive to Fed policy changes, while SHY will lag but may benefit from price appreciation as longer-dated yields fall.
- Minimal credit risk. Both hold direct Treasury obligations backed by the full faith and credit of the U.S. government, so default risk is not a distinguishing concern.
Bottom line
If you need cash-like behavior with minimal volatility, BIL's ultra-short duration and 0.06 beta make it essentially a Treasury money-market fund. If you can tolerate modest price swings for a slightly longer income window, SHY offers similar yields with a 0.22 beta and exposure to the 1–3 year part of the curve. Both are low-cost core holdings, but they solve different portfolio problems: stability versus modest duration positioning. Past performance does not predict future results.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
