Last Updated: 4 Comments – 2 min. read
SGOV is a relatively new ETF from iShares for 0-3 month U.S. Treasury bonds, called T-bills. But is it a good investment for 2024? I review it here.
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Contents
SGOV ETF Review Video
Prefer video? Watch it here:
SGOV ETF Methodology, Dividend Yield, and Fees
SGOV is the iShares 0-3 Month Treasury Bond ETF. It launched in mid-2020 and has since quickly amassed nearly $7 billion in assets, making it one of the most popular ETFs for Treasury Bills. SGOV took in nearly $1 billion in its first 5 months.
SGOV is a pretty simple fund. It just tracks an index that holds ultra short term U.S. Treasury bonds – called T Bills – that mature in 3 months or less. That index is the ICE 0-3 Month US Treasury Securities Index, which is rebalanced monthly.
Because T-bills are the safest bonds out there, we call them a “cash equivalent” and the 3-month T-bill rate is used as what we call the “risk-free rate” when comparing other assets. Some investors even use T-bill funds like SGOV as a savings account for their emergency fund.
The phrase “cash equivalent,” may make you think negligible returns, but T-bills have returned 3.02% annualized historically going back to 1926 for the U.S.
Inflows into T-bill funds like SGOV have soared in recent months to capture their currently-very-attractive yield and to take up a safe haven in short-term U.S. government debt issues. At the time of writing in January 2023, the 3 month T Bill rate is 4.57%, and 5% is not out of the question by the end of the year. Even the past 30 days or so going into 2023 have seen record inflows – nearly $10 billion in the first trading week of the year – into short-term government bond funds after fearful investors are fleeing stocks en masse.
SGOV has an SEC yield of 5.01% and an effective duration of a little over 1 month. It pays its dividend monthly. SGOV is also the most affordable ETF for T-bills with a low fee of 0.07%.
Update 7/21/23: SGOV now has an SEC yield of 5.21% as of July 21, 2023.
SGOV ETF Performance
In its short lifespan thus far, SGOV has beaten its index:
Is SGOV a Good Investment?
So is SGOV a good investment? Sure, if you want T-bills and don't want to bother with buying and rolling a ladder of individual bonds yourself.
SGOV is clearly a great low-cost index fund for T-bills, evidenced by its huge AUM and massive inflows in 2023, and it's the cheapest in its space.
Conveniently, SGOV should be available at any major broker, including M1 Finance, which is the one I'm usually suggesting around here.
What do you think of SGOV? Do you own it? Let me know in the comments.
Disclosure: None.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment 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. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. All examples above are hypothetical, do not reflect any specific investments, are for informational purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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About John Williamson, APMA®
Analytical data nerd, investing enthusiast, fintech consultant, Boglehead, and Oxford comma advocate. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.
Reader Interactions
Comments
Braden saysHi John,
Just a heads up that it looks like the fee waiver was extended until June 30, 2024. Though they are waiving fewer basis points, not that it really matters right now. The new expense ratio is 0.07%
Reply
- Brian says
What are the chances the fee waiver doesn’t get renewed for 2023? Does the actual expense ratio change the calculation?
What about the new kid:
Reply
- John Williamson, APMA® says
Unlikely, but possible I suppose. Even without the waiver, SGOV would still be cheaper than TBIL.
Reply
- Brent says
The Public investing app just started a T-bills account advertising a 5.1% yield, but has a .60% annualized fee. It uses 26-week T-bills. Looks like SGOV might be one of the best alternatives for avoiding that higher fee?
Reply
