Generated April 2026 from current fund data.
Overview
SGOV and SHY are both Treasury ETFs from iShares that track ultra-short and short-term US government bonds, respectively. The key difference is maturity: SGOV holds securities maturing in 0–3 months, while SHY holds bonds maturing in 1–3 years. That maturity gap creates meaningful tradeoffs in yield, duration risk, and price sensitivity to interest-rate moves.
How they differ
The biggest distinction is maturity profile. SGOV's 0–3 month focus makes it function almost like a cash alternative—very stable NAV, minimal interest-rate sensitivity (beta of 0.0), and low volatility. SHY extends into the 1–3 year zone, exposing holders to measurable duration risk (beta of 0.24) and more price fluctuation when rates shift.
Yield is nearly identical: SGOV at 3.59% and SHY at 3.61%. But SGOV's ultra-short duration means that yield is locked in for just weeks; SHY's yield reflects a longer holding period, so reinvestment risk differs. SGOV's expense ratio of 0.09% undercuts SHY's 0.15%—a modest but real cost advantage. SGOV's AUM of $83.6 billion dwarfs SHY's $24.7 billion, suggesting SGOV has broader institutional adoption. Both pay monthly distributions.
Who each is best for
SGOV: Conservative investors using Treasury exposure as a cash-like sleeve in a portfolio, or those who want minimal NAV swings and don't want to time interest-rate moves; works well as an emergency fund or short-term liquidity bucket.
SHY: Investors comfortable holding bonds for 1–3 years, seeking slightly more yield than money-market alternatives, and willing to accept modest price volatility; useful for shorter-term bond allocations in taxable accounts.
Key risks to know
- Duration and rate risk. SHY's longer maturity makes it sensitive to interest-rate moves; a 1% rate rise could knock 1–2% off its NAV. SGOV has virtually no duration risk, so rate hikes barely affect it.
- Reinvestment cliff. SGOV's short maturities mean the portfolio rolls over frequently; falling rates will lower reinvested yields. SHY faces this more slowly.
- Yield compression at low rates. If Treasury yields fall materially, both funds' distribution rates will compress; SHY's longer maturities offer less cushion against that erosion.
Bottom line
If you're treating Treasury exposure as a cash substitute or emergency reserve and want zero price volatility, SGOV's ultra-short maturity and lower fees make it the obvious choice. If you can tolerate some NAV fluctuation and want to lock in slightly higher yield over a 1–3 year horizon, SHY's modest rate sensitivity becomes an asset rather than a liability. Past performance doesn't predict future results, and distribution rates depend on where Treasury yields settle.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
