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

Overview

BIL and USFR are both Treasury-focused fixed-income ETFs that deliver near-risk-free income, but they do it with fundamentally different mechanics. BIL holds ultra-short Treasury bills with a 1–3 month maturity ladder, while USFR invests in longer-dated floating-rate Treasury notes that reset their coupon quarterly. The key distinction: BIL's yield comes from rolling maturing bills; USFR's comes from floating coupons that adjust with short-term rates.

How they differ

The biggest difference is maturity structure. BIL owns bills that mature within 90 days, while USFR holds Treasury floaters with multi-year maturities. This means BIL has essentially no interest-rate risk—price stays near $1.00 as bills approach maturity—while USFR will see small price swings when the discount rate for its longer maturities changes, even though coupons reset frequently.

Second, USFR's coupon resets quarterly based on a short-term Treasury rate, so its yield moves with Fed policy and money-market conditions. BIL's yield is already locked in at each month's roll, making it more predictable month-to-month. Both distributions happen monthly and carry nearly identical expense ratios (0.14% vs. 0.15%), but USFR's $17.3B in AUM is less than a third of BIL's $47.8B.

Third, the yield difference is marginal (3.53% vs. 3.61%), reflecting the small term premium for floating-rate Treasuries over pure bills. USFR's extra 8 basis points doesn't fully compensate for the modest duration and reinvestment-timing variance it introduces.

Who each is best for

BIL: Fits investors seeking the lowest practical volatility and most predictable monthly income from Treasury exposure—typically those with a short time horizon or who want a stable cash parking place that yields more than a money-market account.

USFR: Designed for investors comfortable with modest price fluctuations but wanting a slightly higher coupon that responds mechanically to Fed rate decisions, and who prefer the tax efficiency of a floating-rate structure over rolling short-term bills.

Key risks to know

• Duration risk in USFR: While the coupon floats, the principal value of USFR's notes will decline if the discount rate used to price long-dated Treasury floaters rises. BIL has virtually none of this risk.
• BIL's lower reinvestment potential: As a money-market vehicle on a monthly roll, BIL sacrifices any term premium that longer fixed-income strategies capture; if the yield curve steepens, BIL won't participate in gains from the level of rates rising.
• USFR's coupon-reset timing mismatch: Floating-rate coupons reset only quarterly, so if short rates move sharply intra-quarter, USFR's effective yield lags; conversely, a sharp rate drop will inflate NAV temporarily before the next coupon adjustment pulls it back down.
• Relative illiquidity in longer-dated Treasuries: USFR's underlying floaters are less actively traded than the T-bill secondary market, potentially widening the bid-ask spread in stress periods, though both funds track highly liquid government securities.

Bottom line

If you want zero price volatility and a monthly refresh of income at current money-market rates, BIL is the straightforward choice. If you're willing to tolerate small NAV moves in exchange for a modestly higher yield that resets with Fed policy, USFR edges ahead—though the 8-basis-point yield advantage is narrow enough that the liquidity and simplicity of BIL may outweigh it for many cash allocators. Past performance in either fund does not predict future rate environments or distribution levels.