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

Overview

BIL and SHY are both ultra-short Treasury ETFs that provide safe, liquid income from U.S. government debt—but they target different parts of the yield curve. BIL holds only Treasury bills maturing in 1–3 months, while SHY holds Treasury notes maturing in 1–3 years. That maturity difference is the core distinction: BIL offers money-market-like stability; SHY offers a bit more yield in exchange for modest interest-rate risk.

How they differ

The biggest difference is maturity: BIL's underlying index holds bills expiring in weeks or months, while SHY's holds notes with up to three years to maturity. That means SHY has a beta of 0.24 and moves slightly when rates change, whereas BIL's beta is 0.0—it behaves like a savings account. Yield is nearly identical (BIL 3.53%, SHY 3.61%), so SHY's extra 8 basis points comes from duration risk, not credit quality. Both are cheap to own: BIL costs 0.14%, SHY costs 0.15%. BIL is far larger ($50 billion in AUM versus $25 billion), reflecting its role as a core cash substitute. Both distribute monthly, so income frequency is the same.

Who each is best for

• BIL: Conservative investors who want Treasury exposure without any interest-rate sensitivity, or those using this as a cash-equivalent holding in a brokerage or IRA. Zero volatility makes it suitable for emergency funds or short-term savings.

• SHY: Slightly more aggressive savers willing to accept small price moves in exchange for marginally higher yield, or investors in a ladder strategy who want exposure to the near end of the curve without buying individual bonds.

Key risks to know

• Interest-rate moves. SHY's price will fall if rates rise and rise if rates fall. A 1% rate increase could lower its NAV by roughly 1–2%. BIL has almost no price risk because its holdings mature so quickly.

• Reinvestment risk. Both funds roll holdings frequently. If rates drop sharply, new T-bills or short notes will yield less, reducing forward income.

• Opportunity cost. If the Fed cuts rates and yields fall, both funds' distributions will decline in tandem. There's no hedging against a broad rate environment shift.

• Call or extension risk. T-bills have no call risk, but treasury notes can be called or extended by the Treasury in rare scenarios; this is very low but worth acknowledging for SHY.

Bottom line

If you want true capital stability and don't mind giving up 8 basis points of yield, BIL is the simpler choice—it's a money-market ETF in all but name. If you're comfortable with minimal price swings and want to squeeze out a fraction more income, SHY makes sense, especially in a tax-advantaged account where the small duration moves don't trigger unnecessary gains. Both are among the safest ways to earn current Treasury yields without taking credit risk. Past performance doesn't predict future results, and both funds' distributions will move with whatever the Fed does next.