SGOV and BIL are two popular ETFs for U.S. Treasury Bills. Is there a clear choice for 2024? Let's compare them.
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Treasury bills, or T-bills for short, are just ultra-short-term bonds from the U.S. government. These short bonds with maturities of less than a year are called bills. T-bills are referenced as the “risk-free asset” because they are backed by the full faith and credit of the United States government and thus have no liquidity risk or default risk.
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T-bills are looking particularly attractive right now in early 2023 because interest rates are pretty high. As of April 1, 2023, the 3-month T-bill rate is 4.80%. This makes T-bills a safe place to park cash and still get a decent return.
ETFs provide the convenience of not having to buy or manage individual bonds yourself. I covered some T-bills ETFs in a separate post here. Two of the most popular are SGOV from iShares and BIL from SPDR.
BIL is one of the oldest ETFs for T-bills, having launched in 2007. It is the SPDR Bloomberg 1-3 Month T-Bill ETF. Its age and authority make it the most popular with over $30B in assets.
SGOV, the iShares 0-3 Month Treasury Bond ETF, is much newer and launched in 2020, but has quickly amassed about $10B in assets due to its being the most affordable ETF for T-bills with an expense ratio of 0.05%. This is roughly 1/3 the price of BIL at 0.14%. This difference in fees has allowed SGOV to outperform BIL over its short lifespan.
It's worth noting that SGOV has a fee waiver of 0.07% in place that has been renewed every year since its inception, though it's not necessarily guaranteed past June 30, 2023. That said, even without it, an expense ratio of 0.12% would still be cheaper than BIL.
Other than that, these funds can be considered nearly identical. Both hold T-bills with maturities of 3 months or less, albeit via different indexes. SGOV seeks to track the ICE 0-3 Month US Treasury Securities Index while BIL seeks to track the Bloomberg 1-3 Month U.S. Treasury Bill Index.
While both funds would be considered highly liquid, day traders may appreciate the relatively greater liquidity of BIL, though I'm not sure why you'd be day-trading a T-bills fund in the first place.
| SGOV | BIL | |
|---|---|---|
| Inception | 2020 | 2007 |
| AUM | $10B | $30B |
| Net Expense Ratio | 0.05% | 0.14% |
| Index | ICE 0-3 Month US Treasury Securities Index | Bloomberg 1-3 Month U.S. Treasury Bill Index |
In conclusion, for basically the same asset, SGOV seems like the clear winner in my opinion.
Do you own SGOV or BIL? Let me know in the comments.
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I’m using $BILS, duration risk was only -0.5% max drawdown in 2022
It’s 3-12 months instead of 0-3 iirc