SGOV: The Treasury Bill ETF That Pays Monthly at the Risk-Free Rate
SGOV holds 0-3 month U.S. Treasury bills, pays monthly, costs 0.09%, and earns the current T-bill rate with no credit risk. Here's what it actually is, how it compares to BIL, SHV, money market funds, and T-bills you buy yourself, and who should be using it.
TL;DR: SGOV in 5 Points
- SGOV (iShares 0-3 Month Treasury Bond ETF) holds ~50 Treasury bills maturing within 3 months. Duration is roughly 0.1 years, meaning virtually no interest rate risk.
- SGOV yields approximately the 3-month T-bill rate, which tracks the Fed funds rate closely. In mid-2026, that was around 4.3%.
- Treasury interest is exempt from state and local income tax. In California (13.3% top rate) or New York (10.9%), that exemption is worth real money relative to money market funds holding non-Treasury assets.
- SGOV charges 0.09% versus BIL's 0.135%. Same underlying assets, lower cost. Use SGOV.
- SGOV settles T+1 (next business day). For same-day liquidity needs, a high-yield savings account or bank money market is more appropriate.
What SGOV Actually Is
SGOV is the iShares 0-3 Month Treasury Bond ETF, issued by BlackRock. It tracks the ICE 0-3 Month US Treasury Securities Index, which holds U.S. Treasury bills with remaining maturities of 0 to 3 months.
The fund holds roughly 50 individual Treasury bills at any given time. As each bill matures, the proceeds roll into a new bill with a similar short maturity. You do not need to track any maturity dates. SGOV handles all of it and passes the interest to you as a monthly distribution.
You invest $10,000 in SGOV. The fund buys T-bills maturing in 1, 6, and 12 weeks. As each bill matures, it reinvests in a new bill. Monthly, you receive a distribution reflecting the interest earned that month net of the 0.09% fee. If the 3-month T-bill rate is 4.3%, you earn approximately $430/year on $10,000, or about $35.80/month. You can sell at any time during market hours, with proceeds arriving the next business day.
SGOV is not a savings account, not a money market fund, and not a bond fund in any meaningful duration sense. It sits closer to cash than to fixed income. The price barely moves, the yield resets quickly as rates change, and there is no meaningful risk of losing principal from interest rate movements.
The State Tax Exemption: Why It Matters
Interest income from U.S. Treasury securities is exempt from state and local income taxes under federal law. This applies to every T-bill and Treasury note, and it applies to every distribution from SGOV, since the fund holds only Treasury bills.
This matters most in high-tax states. A California resident in the top bracket (13.3% state rate) investing $100,000 in SGOV at a 4.3% yield earns $4,300 in interest, all of which is exempt from California income tax. The same investor putting $100,000 into a money market fund holding repos and agency securities pays California tax on that income. At 13.3%, the effective after-state-tax yield gap between SGOV and a non-Treasury money market fund is 0.57% annually on $100,000, or $570 per year.
If you live in a no-income-tax state like Florida, Texas, or Nevada, the state tax exemption is irrelevant and the comparison between SGOV and money market funds comes down purely to yield and fee. If you live in California, New York, New Jersey, or Oregon, the state tax exemption is a genuine cost advantage for SGOV that should factor into your comparison.
Note: federal income tax on Treasury interest still applies. The exemption is state and local only.
SGOV vs the Alternatives: Quick Comparison
| Fund / Option | Expense Ratio | Maturity Range | State Tax Exempt | Liquidity |
|---|---|---|---|---|
| SGOV Best Cost | 0.09% | 0-3 months | Yes (100%) | T+1 settlement |
| BIL | 0.135% | 1-3 months | Yes (100%) | T+1 settlement |
| SHV | 0.15% | 0-12 months | Yes (100%) | T+1 settlement |
| TBIL | 0.15% | 3 months (single bill) | Yes (100%) | T+1 settlement |
| VMFXX (money market) | 0.11% | Mixed (Treas + repos) | Partial (~50-70%) | Same day |
| T-bills (direct) | 0% | 4-52 weeks (your choice) | Yes (100%) | Hold to maturity |
SGOV vs BIL: The Simplest Comparison
BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) is SGOV's closest competitor. Both hold U.S. Treasury bills in roughly the same maturity band. Both pay monthly. Both are 100% state-tax exempt. Both have $30-35B in AUM and trade with very tight spreads.
The difference: BIL charges 0.135%, SGOV charges 0.09%. That 4.5 basis point gap equals $45/year on $100,000, or $450/year on $1 million. There is no offsetting performance reason to prefer BIL over SGOV. SGOV wins on cost.
Historical note: BIL launched in 2007 and was the dominant T-bill ETF for years before SGOV launched in 2020 with a lower fee. BIL retains slightly higher AUM because of that head start, but that has no practical impact for individual investors.
For a deeper side-by-side: SGOV vs BIL full comparison.
SGOV vs SHV and TBIL
SHV (iShares Short Treasury Bond ETF) holds Treasury bills and notes with maturities up to 12 months, versus SGOV's 0-3 month range. The slightly longer maturity means SHV has a duration of roughly 0.3-0.4 years versus SGOV's 0.1 years. In practical terms, both are near-cash instruments, but SHV has marginally more interest rate sensitivity. SHV charges 0.15% versus SGOV's 0.09%. For parking cash short-term, SGOV is the better choice on both cost and rate sensitivity.
TBIL (US Treasury 3 Month Bill ETF from F/m Investments) tracks a single on-the-run 3-month T-bill rather than a diversified basket. It charges 0.15%. The single-bill structure introduces minor roll risk at quarterly intervals. SGOV's diversified basket of 50 bills is more consistent. SGOV is cheaper and better diversified.
SGOV vs Money Market Funds
The comparison is closest with Treasury money market funds like Vanguard's VMFXX (Federal Money Market Fund, 0.11%) or Fidelity's SPAXX (0.42%).
VMFXX is competitive on fees and holds a mix of Treasury securities and repurchase agreements collateralized by Treasuries. The "repo" portion is not itself a Treasury security, so VMFXX's state tax exemption is partial. In 2025, approximately 65-75% of VMFXX income qualified for state tax exemption. SGOV is 100% exempt.
The practical advantage of money market funds: same-day liquidity. You sell SGOV, you receive cash the next business day. A money market fund sweep account credits and debits same day. If you need to move money urgently, a money market fund has an edge.
The practical advantage of SGOV: available at any brokerage with no investment minimum, 100% state tax exempt, and slightly better yield net of fees in most environments versus high-fee money market funds. If your brokerage default sweep earns 0.01% (still common), moving that cash into SGOV can add thousands of dollars per year on a six-figure balance.
For a detailed comparison: SGOV vs money market funds: which holds your cash cheaper and SGOV vs VMFXX specifically.
SGOV vs Buying T-Bills Directly
You can buy Treasury bills directly through TreasuryDirect.gov at no fee. The same 0-3 month T-bill SGOV holds costs you exactly zero in expense ratio if you buy it yourself.
SGOV charges 0.09% to handle the rolling, diversification, and monthly distributions on your behalf. On $10,000, that fee is $9/year. On $500,000, it is $450/year. At six figures and above, the fee is real money worth comparing against the convenience value.
Buying direct T-bills: requires tracking maturity dates and reinvesting manually, minimum purchase of $1,000 per bill, no monthly distributions (interest paid at maturity), funds held at TreasuryDirect separate from your brokerage. Your brokerage may also allow T-bill purchases, which adds convenience but often requires minimum purchase amounts and manual reinvestment.
For investors with large cash balances ($250,000+) who are comfortable with the operational steps, buying direct T-bills can save several hundred dollars per year versus SGOV. For most investors, SGOV's convenience, liquidity, and brokerage integration are worth the 0.09% fee.
For the full breakdown: SGOV vs buying T-bills directly: is the 0.09% fee worth it.
Who Should Use SGOV
SGOV is the right tool for investors who:
- Hold significant cash in a brokerage account earning a low default sweep yield. Moving that cash into SGOV earns the full T-bill rate instead of your brokerage's spread-compressed sweep rate.
- Live in a high-income-tax state and want 100% state tax exemption on their cash yield. California, New York, New Jersey, and Oregon investors benefit most.
- Want next-day rather than same-day liquidity. If you are comfortable with T+1 settlement, SGOV is a simple, low-cost solution with no investment minimum and no rollover headaches.
- Are building or maintaining an emergency fund inside a taxable brokerage account where the full T-bill yield and tax efficiency matter more than same-day withdrawal convenience.
SGOV is not the right tool if you need same-day cash access, if you are in a no-income-tax state and your brokerage offers a competitive Treasury money market fund, or if you have $500,000+ in T-bill exposure and want to eliminate the 0.09% fee by buying direct.
For investors trying to decide between SGOV and a comparable fund for short-term bond or fixed income exposure, see the bond ETF guide, which covers where SGOV fits in the broader fixed income spectrum alongside BND, AGG, and longer-duration options.
Frequently Asked Questions
Is SGOV safe?
SGOV holds U.S. Treasury bills backed by the full faith and credit of the U.S. government. Credit risk is effectively zero. Interest rate risk is minimal: with duration of roughly 0.1 years, a 1% rate move changes the fund's price by about 0.1%. The main risk is opportunity cost: if rates rise sharply, SGOV's yield adjusts upward within weeks as old bills mature, but if rates fall, your yield falls with them. That is not a loss, it is just what owning a short-duration instrument means.
Is SGOV better than BIL?
Yes, on cost. SGOV charges 0.09% versus BIL's 0.135%. Both hold essentially the same 0-3 month Treasury bills. The fee difference is 4.5 basis points annually, or $45/year on $100,000. There is no performance reason to prefer BIL. SGOV is the better cost choice for new investors comparing the two.
Is SGOV income exempt from state taxes?
Yes. SGOV holds U.S. Treasury bills, and Treasury interest is exempt from state and local income taxes. This applies to 100% of SGOV's distributions. It matters most in high-tax states: California (13.3% top rate), New York (10.9%), New Jersey (10.75%). In those states, SGOV's effective after-state-tax yield is meaningfully higher than a money market fund holding non-Treasury assets.
Can I use SGOV as an emergency fund?
Yes, with one caveat: SGOV settles T+1, meaning you receive cash the next business day after selling. If you need same-day access to your emergency fund, a high-yield savings account or money market fund with same-day liquidity is more appropriate. If next-day liquidity is acceptable, SGOV is a solid emergency fund option at the full T-bill rate with no credit risk.
How often does SGOV pay distributions?
Monthly. The distribution reflects the interest earned on the Treasury bills held during that month, net of the 0.09% expense ratio. SGOV does not pay quarterly like many equity ETFs; the monthly frequency matches the short maturity of its underlying bills.
Past performance does not guarantee future results. SGOV's yield fluctuates with short-term interest rates and will fall if the Federal Reserve cuts rates. Nothing on this page is personalized financial, tax, or investment advice. State tax treatment depends on your specific state and situation; consult a tax professional for guidance. ETF BFF may receive compensation from brokerage partners referenced on this site.