• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Optimized Portfolio

Investing and Personal Finance

blank space placeholder
  • Beginners Start Here
  • Investing 101
    • Beginners Start Here – 9 Steps to Start Building Wealth
    • What Is the Stock Market? How It Works & How to Invest in It
    • How To Invest in an Index Fund – The Best Index Funds of 2020
    • Portfolio Asset Allocation by Age
    • How to Invest in the S&P 500 Index – 3 of the Best ETFs
    • Why and How To Buy Bonds Online: A Guide for Beginners
    • How To Invest Your Emergency Fund
    • 8 Reasons Why I’m Not a Dividend Income Investor
    • How to Invest Your HSA (Health Savings Account)
  • Lazy Portfolios
    • 60/40 Portfolio
    • All Weather Portfolio
    • Bogleheads 3 Fund Portfolio
    • Couch Potato Portfolio
    • Golden Butterfly Portfolio
    • HEDGEFUNDIE’s Excellent Adventure
    • Permanent Portfolio
    • Warren Buffett Portfolio
    • more…
  • Brokerage Reviews
    • The 5 Best Stock Brokers
    • The 4 Best Investing Apps
    • M1 Finance Review
    • M1 Finance vs. Fidelity
    • M1 Finance vs. Vanguard
    • Stash vs. Robinhood
    • Investing Brokers with the Lowest Margin Rates
    • M1 Borrow Review (How M1’s Margin Loan Works)
  • ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • The 11 Best Dividend ETFs
    • The 7 Best Small Cap Value ETFs
    • The 5 Best REIT ETFs
    • The 5 Best Tech ETFs
    • The 6 Best ETFs for Taxable Accounts
    • The Best Vanguard Bond Funds – 11 Popular ETFs
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • The Best Vanguard Growth Funds – 5 Popular ETFs
    • The 7 Best International ETFs
  • Leverage
    • What Is a Leveraged ETF and How Do They Work?
    • How To Beat the Market Using Leverage and Index Investing
    • The 9 Best Leveraged ETFs
    • Hedgefundie’s Excellent Adventure
    • Leveraged All Weather Portfolio
    • Leveraged Permanent Portfolio
    • Leveraged Golden Butterfly Portfolio
  • Dividends
    • The Best M1 Finance Dividend Pie
    • The 11 Best Dividend ETFs
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • 8 Reasons Why I’m Not a Dividend Income Investor
  • Bonds
    • How To Buy Bonds Online: The Ultimate Guide
    • Treasury Bonds vs. Corporate Bonds
    • The Best Vanguard Bond Funds – 11 Popular ETFs
    • The Best Bond Funds Out There – 13 ETFs
    • The 11 Best Treasury Bond ETFs
    • The 5 Best High Yield Bond Funds for Income
    • The 3 Best Corporate Bond ETFs
    • The 3 Best Municipal Bond ETFs
    • The 3 Best TIPS ETFs

The 11 Best Treasury Bond ETFs (4 From Vanguard)

Last Updated: September 27, 2020 No Comments – 4 min. read

Treasury bonds are the best tool for downside protection and volatility reduction in a diversified investment portfolio. Here we’ll look at the best treasury bond ETFs.

Disclosure:  Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

Contents

  • Introduction – Why Treasury Bonds?
  • The 11 Best Treasury Bond ETFs
    • BIL – SPDR Barclays 1-3 Month T-Bill ETF
    • SHV – iShares Short Treasury Bond ETF
    • SHY – iShares 1-3 Year Treasury Bond ETF
    • VGSH – Vanguard Short-Term Treasury ETF
    • VGIT – Vanguard Intermediate-Term Treasury ETF
    • IEF – iShares 7-10 Year Treasury Bond ETF
    • GOVT – iShares U.S. Treasury Bond ETF
    • TLH – iShares 10-20 Year Treasury Bond ETF
    • VGLT – Vanguard Long-Term Treasury ETF
    • TLT – iShares 20+ Year Treasury Bond ETF
    • EDV – Vanguard Extended Duration Treasury ETF
  • Where To Buy These Treasury Bond ETFs

Introduction – Why Treasury Bonds?

The federal government issue bonds to investors to pay for operating costs in running the country. Because they’re guaranteed by the full faith and credit of the U.S. government, treasury bonds are considered to be the “safest” investment, and are thus popular among retirees and risk-averse investors. More importantly, treasury bonds offer the lowest correlation to stocks of any asset class, providing a superior diversification benefit compared to corporate bonds. Treasury bonds should be the first diversifier of choice alongside stocks.

Treasury bond behavior differs between different maturity lengths. Ultra-short-term treasury bonds with a maturity of less than 1 year are called “T Bills.” They are considered to be a “cash equivalent” because of their nearly nonexistent exposure to interest rate risk. This safety also comes with the lowest expected returns. On the flip side are “long bonds” with maturities greater than 20 years. In between those are “intermediate term” bonds with maturities of 5 years, 7 years, 10 years, etc. Various funds offer baskets of bonds of specific maturities.

Long-term bonds offer more risk with the potential for more reward, having the most exposure to interest rate risk. Longer-term bonds also tend to be less correlated to stocks than shorter-term bonds. As the names suggest, long-term bonds are more appropriate for investors with a long time horizon, and short-term bonds are more appropriate for retirees with a short-time horizon. I’m of the mind that bond maturity should roughly match investing horizon, especially for those with an aggressive asset allocation that only allocates a small amount of the portfolio to bonds.

Below we’ll look at the best treasury bond ETFs.

The 11 Best Treasury Bond ETFs

Below are the 11 best treasury bond ETFs, sorted by shortest to longest duration.

BIL – SPDR Barclays 1-3 Month T-Bill ETF

The SPDR Barclays 1-3 Month T-Bill ETF (BIL) is the shortest-term T-Bill ETF available, and is thus the closest you can get to a true “cash equivalent.” The fund seeks to track the Barclays Capital U.S. 1-3 Month Treasury Bill Index, T-Bills with maturities between 1 month and 3 months. This ETF has a weighted average maturity of 1.08 months and an expense ratio of 0.14%.

SHV – iShares Short Treasury Bond ETF

Slightly longer than BIL above is the iShares Short Treasury Bond ETF (SHV), holding bonds with maturities of 1 year or less. Its average weighted maturity is 4.7 months. This ETF is one of the most popular for T-Bills, with over $20 billion in assets. The fund seeks to track the Barclays Capital U.S. Short Treasury Bond Index and has an expense ratio of 0.15%.

SHY – iShares 1-3 Year Treasury Bond ETF

The most popular treasury bond ETF out there is the iShares 1-3 Year Treasury Bond ETF (SHY), with over $21 billion in assets. This fund allows investors to access short-term treasury bonds via the Barclays Capital U.S. 1-3 Year Treasury Bond Index. This ETF has a weighted average maturity of 1.9 years and an expense ratio of 0.15%.

VGSH – Vanguard Short-Term Treasury ETF

A more affordable way to track the same index as SHY above is with the Vanguard Short-Term Treasury ETF (VGSH). It has an expense ratio of only 0.05%, and its weighted average maturity is slightly longer at 2.0 years. VGSH is less popular than SHY, with $13 billion in assets.

VGIT – Vanguard Intermediate-Term Treasury ETF

The Vanguard Intermediate-Term Treasury ETF (VGIT) is an affordable way to access intermediate-term treasury bonds. This ETF seeks to track the Bloomberg Barclays U.S. Treasury 3–10 Year Bond Index. This fund has a weighted average maturity of 5.7 years and an expense ratio of 0.05%.

IEF – iShares 7-10 Year Treasury Bond ETF

Still in the intermediate space but slightly longer than VGIT above is the iShares 7-10 Year Treasury Bond ETF (IEF), which seeks to track the ICE U.S. Treasury 7-10 Year Bond Index. The fund has a weighted average maturity of 8.4 years and an expense ratio of 0.15%

GOVT – iShares U.S. Treasury Bond ETF

Those seeking broader exposure – or those who don’t want to pick a bond maturity – may simply want to buy the entire U.S. treasury market, which can be done with the iShares U.S. Treasury Bond ETF (GOVT). The fund matches the weighted average maturity of the whole U.S. treasury bond market at 8.5 years. The fund tracks the ICE U.S. Treasury Core Bond Index, holding bonds with maturities between 1 year and 30 years. This ETF has over $14 billion in assets and an expense ratio of 0.15%.

TLH – iShares 10-20 Year Treasury Bond ETF

Investors seeking specific exposure to maturities between “intermediate” and “long” can use the iShares 10-20 Year Treasury Bond ETF (TLH). This fund is less popular than others on the list, with assets of only a little over $1 billion. The ETF seeks to track the ICE U.S. Treasury 10-20 Year Bond Index and has an expense ratio of 0.15%.

VGLT – Vanguard Long-Term Treasury ETF

The Vanguard Long-Term Treasury ETF (VGLT) is a popular, affordable way to access long-term treasury bonds. Bonds in this fund have a weighted average maturity of 25.1 years. The fund seeks to track the Bloomberg Barclays U.S. Long Treasury Bond Index and has an expense ratio of 0.05%.

TLT – iShares 20+ Year Treasury Bond ETF

Slightly longer than VGLT above is the iShares 20+ Year Treasury Bond ETF (TLT), with a weighted average maturity of 26.0 years. TLT can be considered more liquid than VGLT but has a higher expense ratio at 0.15%. The fund seeks to track the ICE U.S. Treasury 20+ Year Bond Index.

EDV – Vanguard Extended Duration Treasury ETF

STRIPS are long-dated treasury bonds with the coupon payment “stripped,” or removed. The fund seeks to track the Bloomberg Barclays U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index and has a weighted average maturity of 25.3 years but also has an average duration – the measure of sensitivity to interest rate changes – of 24.6 years.

Where To Buy These Treasury Bond ETFs

All the above treasury bond ETFs are available at M1 Finance. M1 has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, intuitive pie visualization, and a sleek, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.


Interested in more Lazy Portfolios? See the full list here.

Disclaimer:  While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

m1 finance get started

Related Posts

  • Treasury Bonds vs. Corporate Bonds – The Showdown
  • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETFs
  • The Best M1 Finance Dividend Pie for FIRE & Income Investors
  • Improving M1 Finance’s Aggressive Portfolio Pie
  • Improving M1 Finance’s Moderately Aggressive Pie

About John Williamson

Analytical and entrepreneurial-minded data nerd, usability enthusiast, Boglehead, and Oxford comma advocate. I lead the Paid Search marketing efforts at Gild Group. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Most Popular

Ray Dalio All Weather Portfolio Review, ETF’s, & Leverage

Riding the HEDGEFUNDIE Adventure (UPRO/TMF) on M1 Finance

Golden Butterfly Portfolio Review and M1 Finance ETF Pie

Harry Browne Permanent Portfolio Review, ETFs, & Leverage

Treasury Bonds vs. Corporate Bonds – The Showdown

VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETFs

The 60/40 Portfolio Review and ETF Pie for M1 Finance

Bogleheads 3 Fund Portfolio Review and Vanguard ETFs To Use

The Best M1 Finance Dividend Pie for FIRE & Income Investors

Portfolio Asset Allocation by Age – Beginners to Retirees

The 5 Best Stock Brokers Online for Investing (2021 Review)

The 4 Best Investing Apps for Beginners (2021 Review)

The 7 Best Small Cap Value ETFs (3 From Vanguard)

m1 sidebar

Footer

  • Email
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • RSS
  • Twitter
  • YouTube
  • Reddit

Amazon Affiliate Disclosure

OptimizedPortfolio.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Email Newsletter

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

Copyright © 2021 OptimizedPortfolio.com


About - Privacy - Terms - Contact

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Ok, Got ItReject Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.