SGOV vs. BIL vs. BOXX: Which Ultra-Short-Term ETF Is Best?
- These ETFs are pulling in more assets than most equity funds in 2025.
- While these ETFs are generally low-risk, they’re not risk-free.
In 2025, ultra-short-term ETFs are enjoying a massive surge in popularity, and for good reason. Investors are searching for high yields, relative safety and places to park cash as markets wobble under the pressure of geopolitical tensions, trade-related inflation and economic uncertainty.
The iShares 0–3 Month Treasury Bond ETF (SGOV) has emerged as a favorite, pulling in $22 billion in flows year to date, trailing only the largest exchange-traded fund in the world, the Vanguard S&P 500 ETF (VOO), in asset growth among all ETFs.
But SGOV isn't the only option. This data dive compares SGOV, the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and the Alpha Architect 1-3 Month Box ETF (BOXX) to help you decide which ultra-short-term bond ETF might be the best fit for your portfolio.
Why Ultra-Short-Term ETFs Are in High Demand
Investors have flocked to ultra-short-term ETFs this year for several key reasons.
- High yield relative to risk: With interest rates still elevated and inflation proving sticky, ultra-short-term Treasurys offer yields above 4%, an attractive alternative to money market accounts, high-yield bank savings or certificates of deposit (CDs).
- Liquidity and flexibility: These ETFs allow easy access to cash with daily liquidity, making them a prime choice for investors seeking safety without sacrificing too much return.
- Market uncertainty: Concerns over economic growth, stagflation and the impact of tariffs on inflation have made long-duration assets riskier. Ultra-short-term bond ETFs offer stability and less price volatility.
SGOV vs. BIL vs. BOXX: Similarities and Differences
SGOV, BIL and BOXX are all ETFs designed to provide exposure to ultra-short-term U.S. Treasury yields, making them popular choices for investors seeking a cash-like allocation with slightly higher returns than traditional money market funds or bank accounts. However, they employ different strategies and have distinct characteristics.
Here's a breakdown of their main similarities and differences.
Similarities
Objective
All three ETFs aim to provide returns that are highly correlated with short-term U.S. Treasury rates, specifically those with very short maturities (typically 0-3 months). This makes them suitable for parking cash, managing liquidity or as a low-volatility component in a diversified portfolio.
Low Interest Rate Risk
Due to their focus on ultra-short-term maturities, these ETFs have very low interest rate sensitivity (duration). This means their prices are relatively stable even when interest rates fluctuate.
High Credit Quality
They primarily invest in U.S. Treasury securities or strategies that derive their returns from U.S. Treasurys, making them backed by the full faith and credit of the U.S. government. This offers extremely low credit risk.
Daily Liquidity
As ETFs, they trade on major exchanges throughout the day, providing investors with daily liquidity, unlike traditional bonds held to maturity.
Differences
Underlying Strategy, Holdings
SGOV is a traditional bond ETF that directly invests in a portfolio of U.S. Treasury bills with remaining maturities of less than or equal to three months. It tracks the ICE 0-3 Month US Treasury Securities Index.
BIL also directly invests in U.S. Treasury bills. Its objective is to track the performance of the Bloomberg 1-3 Month U.S. Treasury Bill Index. The primary difference from SGOV is its specific index and slightly different maturity range within the ultra-short-term segment.
BOXX is a unique choice in this group. Instead of directly holding Treasury bills, BOXX primarily uses an exchange-listed options strategy called a "box spread." A box spread involves a combination of options that are designed to generate a fixed, risk-free return over a specific period, essentially replicating the economics of a loan at the risk-free rate (like Treasury bills). This allows BOXX to aim for T-bill-like returns without directly holding T-bills.
Tax Efficiency/Tax Treatment (Key for BOXX)
As traditional bond ETFs, the income SGOV and BIL generate from T-bills is generally taxed as ordinary income for federal tax purposes. While U.S. Treasury interest is exempt from state and local income taxes, the federal tax treatment is ordinary income.
Taxation is BOXX's primary differentiating factor and selling point. By using box spreads, which is an advanced options strategy that uses a combination of calls and puts to create a risk-free, arbitrage-like profit, the BOXX ETF can be highly advantageous for investors in taxable accounts, especially when holding for at least one year.
This is because long-term capital gains are taxed at potentially lower rates than ordinary income. BOXX also employs a strategy to avoid distributing capital gains at year-end through in-kind redemptions, further enhancing its tax efficiency.
SGOV vs. BIL vs. BOXX: AUM, Cost, Yield & Performance
Ticker | Fund | AUM | Expense Ratio | Yield | 1-Yr TR |
$51.8B | 0.09% | 4.2% | 4.7% | ||
$41.7B | 0.14% | 4.2% | 4.6% | ||
$7.1B | 0.19% | 4.6% | 4.7% |
Source: etf.com ETF Comparison Tool & FactSet Data as of July 24, 2025. BOXX yield data from Alpha Architect.
While all three offer a very low-risk way to earn short-term Treasury yields, SGOV and BIL are straightforward bond ETFs, directly holding T-bills, with SGOV often being preferred for its lower expense ratio.
BOXX stands out for its innovative options strategy designed to deliver T-bill-like returns with potentially significant tax advantages, particularly for investors in higher tax brackets and taxable accounts. Note that, as part of its tax-advantaged strategy, BOXX does not aim for yield but rather a total return that can edge out traditional funds.
Tip: Use etf.com's fund comparison tool to dive deeper into the data: SGOV vs. BIL vs. BOXX
Who Should (and Shouldn’t) Invest in These ETFs
Ultra-short-term ETFs may be ideal for:
- Investors seeking a safe, liquid place to hold cash or park funds short-term
- Those looking for yield without equity or long-term bond risk
- Tactical allocators waiting for better opportunities elsewhere
They may not be ideal for:
- Long-term investors seeking growth or income beyond Treasury yields
- Those who don’t need liquidity and could lock in higher yields via individual bonds
- Investors unfamiliar with options mechanics may want to steer clear of BOXX despite its advantages
Which Ultra-Short-Term ETF is Right for You?
Ultra-short-term bond ETFs like SGOV, BIL and BOXX have become go-to vehicles in 2025 for parking cash, earning solid yields and managing risk.
- SGOV is the clear winner for many due to its low cost and pure-play exposure.
- BIL is a close alternative with deep liquidity and a long track record.
- BOXX offers a unique tax-advantaged structure for those comfortable with a more complex strategy.
While these ETFs are generally low-risk, they’re not risk-free. Advisors and investors should weigh costs, yield, tax implications and strategy before investing. In a world of persistent inflation and market uncertainty, choosing the right ultra-short-term ETF can be a smart short-term move—but only as part of a well-rounded portfolio strategy.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.
At the time of publication, Kent Thune held a position in SGOV.
