Vanguard’s New Ultra-Short Bond ETFs Attract Billions

Vanguard’s pair of ultra-short-term bond ETFs are off to a strong start as investors continue pouring money into the front end of the Treasury curve.

The Vanguard 0–3 Month Treasury Bill ETF (VBIL) and the Vanguard Ultra-Short Treasury ETF (VGUS) both launched in February with expense ratios of 0.07%. Since then, VBIL has taken in $4.2 billion, while VGUS has pulled in $509 million.

Both funds sit in the broader ultra-short-term bond ETF category, which has been one of the most popular segments of 2025. The standout remains the iShares 0–3 Month Treasury Bond ETF (SGOV), which has attracted $33.5 billion this year and has grown into a $63 billion ETF.

VBIL is effectively Vanguard’s answer to SGOV. It holds the same types of 0–3 month T-bills but undercuts SGOV’s fee by 2 basis points, or a difference of $2 per year on every $10,000 invested. 

It’s not a huge gap, but it may appeal to investors looking for the absolute cheapest exposure. Vanguard’s brand and distribution strength don’t hurt either. The result is that investors now have two extremely low-cost choices in the 0–3 month T-bill space from heavyweight issuers.

VGUS has also seen solid inflows, but hasn't been as popular as VBIL. Its portfolio extends out to Treasuries with maturities of 12 months or less, introducing slightly more interest rate risk at a time when many investors are keeping their duration as close to zero as possible.

Beyond Vanguard, Ultra-Short Demand Stays Hot

The appetite for ultra-short-term fixed income extends well beyond Vanguard. Investors have been allocating heavily to funds with durations under a year. 

After SGOV, the next most popular fund is the State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), with $6.9 billion of year-to-date inflows. The actively managed JPMorgan Ultra-Short Income ETF (JPST) has pulled in $7 billion, while the Alpha Architect 1–3 Month Box ETF (BOXX) has added $4.3 billion.

JPST boosts yields by taking modest credit risk, while BOXX uses an options strategy built on box spreads to turn interest income into deferred capital gains.

JPST is up 4.6% year-to-date, while the other ETFs mentioned have returned 3.8% to 3.9%.