SGOV vs. BIL: Money Moves Into Ultra-Short-Term Bond ETFs
Investors have embraced ultra-short-term bond ETFs this year. Here's why.
Two surprising names have emerged on this year’s inflows leaderboard: the iShares 0-3 Month Treasury Bond ETF (SGOV) and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), with year-to-date inflows of $7.8 billion and $4.8 billion, respectively.
That makes them the second- and sixth-most popular exchange-traded funds of the year based on inflows—a rare feat for ultra-short-term bond ETFs. So, why are investors piling into these funds?
Why Investors Are Buying
One key driver is the rising fear of a potential recession. Ultra-short-term bond ETFs are among the safest investments in the market, offering near risk-free returns.
Another reason is that these ETFs are increasingly viewed as viable alternatives to traditional government money market funds. While both offer low-risk exposure to Treasury bills, ETFs come with a liquidity advantage—they can be traded throughout the day, unlike money market funds, which typically settle at the end of the day.
SGOV vs. BIL
SGOV and BIL offer very similar exposure, as both hold short-term U.S. Treasury bills. However, there are some key differences. First, BIL is slightly larger, with $40.5 billion in assets under management versus $37.4 billion for SGOV. However, given SGOV’s rapid growth, it may soon overtake BIL.
Source: etf.com
SGOV has a lower expense ratio—0.09% compared to 0.14% for BIL, according to etf.com’s ETF comparison tool.
Source: etf.com
That lower fee has contributed to SGOV’s slight performance edge, with a 5.03% return over the past year versus 4.97% for BIL.
Source: etf.com
Other Options in the Space
While SGOV and BIL dominate the category, they aren’t the only ultra-short-term bond ETFs attracting assets. The actively managed JPMorgan Ultra-Short Income ETF (JPST) has seen inflows of $2.8 billion so far this year. Its total AUM of $31.3 billion is not far behind SGOV and BIL.
For a full list of ultra-short-term bond ETFs, check out etf.com’s Ultra-Short-Term ETFs topics page. Click through to individual ETF fund pages to learn more about their strategies.
