VBIL and VGUS – Vanguard Launches 2 New ETFs for T-Bills

Vanguard launched new ETFs for U.S. T-Bills – VBIL and VGUS – in February 2025. I briefly summarize them here.

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After weirdly previously having no products for Treasury Bills and hearing investors' demands for short-term liquidity, Vanguard has finally launched 2 new ETFs for them.

“VGUS and VBIL can be a solution for those who rely on ultra-short bond funds and ETFs to manage their liquidity needs,” said Daniel Reyes, Global Head of Vanguard Portfolio Review Department. “These new ultra-short Treasury ETFs fill the gap between Vanguard’s money market funds and our existing ultra-short-term bond offerings, enabling investors to build portfolios with greater precision using Vanguard ETFs.”

VBIL – Vanguard 0-3 Month Treasury Bill ETF

Here's the profile on VBIL at a glance:

VBIL is the Vanguard 0-3 Month Treasury Bill ETF. As the name suggests, it provides exposure to U.S. Treasury Bills that mature in 3 months or less. This makes it more of a true cash equivalent than slightly longer T-bills provided by the other fund VGUS.

VBIL seeks to track the Bloomberg 0-3M Treasury Bill Index, an index tracked by other popular T-bills ETFs like SGOV and BIL, and has an expense ratio of 0.06%, making it pretty competitive in this space.

Clearly many have caught on to that fact. In April 2026, VBIL has quickly amassed over $7 billion in AUM in less than a year.

The fund is managed by Josh Barrickman of Vanguard's Fixed Income Group Indexing team, the same crew that runs Vanguard's other huge bond funds like VGSH, VGIT, and BND.

VGUS – Vanguard Ultra-Short Treasury ETF

Here are the quick stats on VGUS at a glance:

VGUS is the Vanguard Ultra-Short Treasury ETF. The name might have you thinking this one is using short bonds like their other fund VGSH, but this one is just T-bills with maturities less than 1 year, making it slightly longer than VBIL.

That means VGUS holds 4-week, 13-week, 26-week, and 52-week bills, plus any longer-dated Treasury note or bond that has rolled into the under-one-year bucket. The result is roughly 90 holdings versus VBIL's 26, and a small but meaningful increase in average duration.

VGUS seeks to track the Bloomberg Short Treasury Index and has a fee of 0.07%.

In April 2026, VGUS has amassed nearly $1 billion in AUM.

How Do VBIL and VGUS Work?

Let's briefly recall how T-bills work in the context of VBIL and VGUS.

T-bills do not pay interest; they are sold at a discount to their par value, and the difference is their effective “interest,” which VBIL and VGUS distribute as monthly dividends.

Both funds are buying US Treasury bills and selling them as they mature. The NAV rises gradually through the month as interest accrues, then drops by the distribution amount at the beginning of the following month.

Basically, you buy either of these ETFs and get paid monthly “interest.”

VBIL vs. VGUS

Here's a quick comparison table for VBIL vs. VGUS:

The conventional wisdom says VGUS should yield more than VBIL because it takes on more duration risk. You're effectively lending the government money for up to a year instead of up to three months, so you'd expect to be paid more for that. And that's usually true.

But sometimes like right now, the yield curve out to twelve months is essentially flat, so the difference in yield is basically negligibly small. Notice how right now at the time of writing in April 2026, the yield for VBIL and VGUS is nearly the same.

When the Fed is cutting rates, VGUS has the slight edge. It holds longer-dated bills that still earn yesterday's (higher) rate for a few extra months before they mature and roll into new, lower-rate bills.

VBIL's ultra-short portfolio reprices almost immediately after a Fed cut, so it's going to reflect new rates more quickly. In the back half of 2025, when the Fed cut 75 basis points total, VGUS actually held its yield a bit better than VBIL for several months.

When the Fed is hiking rates, VBIL has the advantage. Its 0-3 month portfolio rolls into new, higher-rate bills within weeks, and VGUS lags because it's still holding 6- and 12-month bills purchased when rates were lower.

As I hinted at earlier, when the curve is flat (like now in mid 2026), there's essentially no extra yield pickup for taking the extra duration risk, so VBIL and VGUS are neck and neck on yield.

For near-term liability cash management purposes, VBIL is the cleaner, more liquid default. This is illustrated in its much larger AUM.

VGUS is the right choice if you have a specific view that rates are heading lower and you want to capture current yields for as long as possible (up to a year). If you have no strong view on Fed policy (you probably shouldn't), VBIL is probably the better choice.

Naturally, your inclination is probably to want to compare VBIL to SGOV, the stalwart T-bills ETF from iShares. I compared them in a separate post here.

VBIL vs. VGUS vs. VGSH

Another natural comparison is to Vanguard's long-standing short treasury fund VGSH, which was previously the shortest government bond fund Vanguard offered. Here's how that comparison shakes out for VBIL, VGUS, and VGSH:

VGSH is not a T-bills fund. VGSH holds 1-3 year U.S. Treasury notes and bonds with an effective duration of a little under years. That's about 20x more duration than VBIL.

VGSH also currently yields about 30 basis points more than VBIL. Again, that premium exists because you're taking on more duration risk. A 100-basis-point rate increase would knock roughly 1.9% off VGSH's NAV. That doesn't happen with VBIL, for better or worse.

VBIL is the natural choice for cash you might need in months. VGSH is for money you won't need for 1-3 years and are willing to sit through some minor volatility to capture a higher yield.

A nontrivial consideration is also that VGSH, with a fee of 0.03%, costs less than VBIL and VGUS.

Tax Treatment of VBIL and VGUS

Finally, in the interest of full disclosure, let's briefly recap how T-bills are taxed in this context.

Both VBIL and VGUS distribute dividends monthly, which are taxed federally as ordinary income but are exempt from state and local taxes because they are 100% US government debt obligations.

What do you think of these new T-bills funds from Vanguard? Let me know in the comments.

Disclosures: None.

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