Wealthy PotBND vs SGOV: A Core Bond Fund and a Cash Fund Do Different Jobs
Table of Contents
The Short Answer
- They are not substitutes. BND owns the whole investment-grade US bond market, about 11,400 bonds with maturities over one year. SGOV owns Treasury bills that mature within three months. One is a bond allocation; the other is a place to park cash.
- Duration: 5.7 years against 0.11 years. As a rough rule, a one-point rise in rates would knock about 5.7% off BND's price and about 0.1% off SGOV's. That is a hypothetical rule of thumb, not a forecast.
- 2022 shows it. BND returned -13.15% that year. SGOV returned +1.58%.
- The rate gap is what BND pays you for that risk. On 1 October 2026 BND's 30-day SEC yield was 5.07% and SGOV's was 3.70%.
- BND is cheaper to own. 0.03% a year against SGOV's 0.09%.
- Overlap is 0%. Both funds own US Treasuries, but our checker matches Treasuries bond by bond, and the two funds hold different maturities, so they have no bond in common.
- Holding both is reasonable. Many investors keep near-term cash in something like SGOV and their long-term bond allocation in something like BND. They do different jobs.
Overlap: 0%, No Bond in Common
Our Portfolio Overlap Checker scores BND and SGOV at 0%, with no shared holdings. That can look odd at first. Every one of SGOV's holdings is issued by the US Treasury, and US Treasury debt made up 48.1% of BND on its Form N-PORT for 30 June 2026. But the checker matches Treasuries by the exact bond, not by issuer, and the two funds own different maturities.
On SGOV's N-PORT for 31 May 2026, its Treasury bills matured between 2 June and 27 August 2026. BND's index only includes bonds "with maturities of more than 1 year," and on its 30 June 2026 filing its earliest Treasury maturity was 15 June 2027. The two funds cannot own the same bond.
The rest of BND, by the issuer categories in that same filing, was about 27% corporate bonds and about 20% mortgage-backed securities from US government agencies and government-sponsored enterprises, with smaller slices of foreign government and other debt. SGOV owns none of that.
BND vs SGOV, Side by Side
| BND | SGOV | |
|---|---|---|
| Full name | Vanguard Total Bond Market ETF | iShares 0-3 Month Treasury Bond ETF |
| Index | Bloomberg U.S. Aggregate Float Adjusted Index | ICE 0-3 Month US Treasury Securities Index |
| What it holds | Investment-grade Treasuries, corporates, mortgage-backed and other bonds, all over 1 year to maturity | US Treasury bills, 3 months or less to maturity |
| Expense ratio | 0.03% | 0.09% |
| Prospectus cost example, $10,000 over 10 years | $39 | $115 |
| Holdings | 11,421 bonds (31 Aug 2026) | 22 T-bill positions (N-PORT, 31 May 2026) |
| Duration | 5.7 years average duration (31 Aug 2026) | 0.11 years effective duration (1 Oct 2026) |
| Average maturity | 8.2 years (31 Aug 2026) | 0.11 years (1 Oct 2026) |
| 30-day SEC yield, 1 Oct 2026 | 5.07% | 3.70% |
| 2022 calendar return | -13.15% | +1.58% |
| Worst calendar quarter in prospectus chart | -5.94% (Q1 2022) | 0.00% (Q4 2021) |
| Net assets | $398.9 billion whole fund, all share classes (31 Aug 2026) | $113.1 billion (2 Oct 2026) |
| Inception | 3 April 2007 | 26 May 2020 |
Duration Is the Whole Difference
Duration measures how much a bond fund's price moves when interest rates change. BND's average duration was 5.7 years on 31 August 2026. SGOV's effective duration was 0.11 years on 1 October 2026. The two figures come from different issuers' models, but the gap between them is too large for that to matter.
The usual rule of thumb multiplies duration by the change in rates. On that basis, and only as a hypothetical illustration, a one-percentage-point rise in rates would lower BND's price by roughly 5.7% and SGOV's by roughly 0.1%. A one-point fall would do the reverse. Real moves differ because rates do not shift evenly across maturities and because BND also holds corporate and mortgage bonds whose prices move for other reasons.
Vanguard's prospectus states the general rule: "When interest rates rise, bond prices tend to fall, and when interest rates fall, bond prices tend to go up." SGOV's prospectus says "securities with longer maturities generally are more sensitive to interest rate changes." With everything maturing inside three months, SGOV has very little maturity to be sensitive with.
The other side of the trade is income stability. When rates fall, SGOV's yield follows them down within weeks as its bills mature. BND's yield adjusts much more slowly, and its price rises.
Returns: 2022 and After
| Calendar year, total return at NAV | BND | SGOV |
|---|---|---|
| 2021 | -1.66% | 0.02% |
| 2022 | -13.15% | 1.58% |
| 2023 | 5.70% | 5.13% |
| 2024 | 1.34% | 5.28% |
| 2025 | 7.11% | 4.24% |
| Average annual total return to 31 Dec 2025 | 1 year | 5 years | 10 years |
|---|---|---|---|
| BND (NAV, before taxes) | 7.11% | -0.40% | 2.00% |
| SGOV (before taxes) | 4.24% | 3.23% | not available |
Over the five years to the end of 2025, the cash fund beat the bond fund by more than three and a half points a year. Compounding the calendar returns above, $10,000 in BND at the start of 2021 would have been worth about $9,800 at the end of 2025, and $10,000 in SGOV about $11,720. That is our arithmetic on the published yearly returns, with distributions reinvested and no taxes, and it is a hypothetical illustration.
That five-year window starts with rates near zero and includes the 2022 rate rise, which is the worst setup a bond fund can have. It is also why the comparison is not a verdict. In 2023 and 2025, BND came out ahead. And the damage can recur: Vanguard's profile showed BND's total return at NAV for the three months to 30 September 2026 at -3.43%.
Past performance does not guarantee future results. This is educational information, not personalised investment advice.
The Yield Gap and What It Pays For
On 1 October 2026 BND's 30-day SEC yield was 5.07% and SGOV's was 3.70%, a gap of 1.37 points. That extra income is the compensation for holding longer bonds and some corporate credit. If rates hold steady, BND earns the higher yield and SGOV earns the lower one. If longer rates rise, a single year of BND's price loss can wipe out several years of that 1.37-point advantage, as 2022 showed.
The fee runs the other way: BND charges 0.03% and SGOV 0.09%. On $10,000 that is $3 against $9 a year, small next to the yield and price differences.
For more on how float adjustment shapes BND's index, see AGG vs BND. If you are choosing between BND and Vanguard's mutual fund version, see BND vs VBTLX.
Tax Treatment
Both funds pay dividends that are taxed federally as ordinary income. The difference is at the state level. Interest on US Treasury obligations is exempt from state and local income tax under 31 U.S.C. § 3124, and IRS Publication 550 says "Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes."
SGOV holds essentially nothing but Treasury bills, so nearly all of its income is Treasury interest. BND held about 48% Treasuries on its 30 June 2026 filing, so only part of its income is. Whether a fund's Treasury-derived dividends keep the exemption on your state return depends on your state's rules. SGOV's prospectus words it this way: "Certain states and localities may exempt from tax distributions attributable to interest from U.S. federal government obligations." We do not give a percentage for either fund, because we did not pull the issuers' tax-year documents.
Practical consequence: in a taxable account in a high-tax state, SGOV's yield is worth relatively more after state tax than BND's. Inside an IRA or 401(k), state tax does not apply year by year, so the comparison is just yield and risk.
Which One, or Both?
- Emergency fund or money you need within a year or two: SGOV, or a money market fund or high-yield savings account. BND's -13.15% year is exactly what near-term money cannot afford. Compare options in SGOV vs SPAXX and the money market funds hub.
- A long-term bond allocation in a retirement portfolio: BND. It holds bonds across the maturity range and charges 0.03%. A 401(k) menu may offer the same Vanguard fund in an institutional class, or a similar total bond index fund.
- A home deposit or tuition bill in 6 to 18 months: SGOV, or a Treasury bill or CD matched to the date. See CDs vs Treasury bills.
- Taxable account in a high-tax state, cash sleeve: SGOV's Treasury-only income is the stronger case, subject to your state's rules.
- You think rates will fall: that is a bet, not a plan. If you are right, BND gains in price and SGOV's yield drops. If you are wrong, 2022 is the example.
- Both: sensible. Cash in SGOV for what you need soon, BND for the part of the portfolio meant to stay in bonds for years. Unlike most pairs on this site, owning both does not duplicate anything.
If you want something in between, a 1-3 year Treasury fund sits between the two. We compare one in SGOV vs VGSH. For the basics of each Treasury type, see Treasury bills, notes and bonds.
Sources & Methodology
Every figure on this page was read from the primary source named below. Fees and returns come from each fund's own summary prospectus. Yields, durations and asset totals come from the issuers' own product pages, with each issuer's as-of date. The overlap figures come from the funds' SEC Form N-PORT filings. No figure came from a data aggregator or another comparison site.
- Vanguard Total Bond Market ETF (BND), Summary Prospectus dated 28 April 2026 (Form 497K, SEC EDGAR): the 0.03% fee, cost example, index, maturity rule, calendar-year returns including 2022, worst quarter, and returns to 31 December 2025.
- iShares 0-3 Month Treasury Bond ETF (SGOV), Summary Prospectus dated 29 June 2026 (Form 497K, SEC EDGAR): the 0.09% fee, cost example, index, calendar-year returns, worst quarter, returns to 31 December 2025, and the state-tax sentence.
- Vanguard BND profile: 30-day SEC yield as of 1 October 2026, characteristics as of 31 August 2026, and returns to 30 September 2026.
- iShares SGOV product page: 30-day SEC yield, effective duration and maturity as of 1 October 2026, net assets as of 2 October 2026.
- SEC Form N-PORT: BND (Vanguard Total Bond Market Index Fund) for 30 June 2026 and SGOV for 31 May 2026, read by our Portfolio Overlap Checker and checked bond by bond.
- 31 U.S.C. § 3124 and IRS Publication 550 (for 2025 returns): the state and local tax exemption for Treasury interest.
How the overlap was computed. The checker takes, for every holding both funds own, the smaller of its two weights and adds them up. It matches US Treasuries by individual security identifier (CUSIP), which gives 0% here, because the two funds share no security. The two filings are a month apart.
This article is for general education only and is not investment, tax or legal advice. Bond funds can and do lose money, and BND fell 13.15% in 2022. SGOV can also lose value, trades at a market price, and pays less when short-term rates fall. The duration rule of thumb is a hypothetical illustration. All figures were checked on 5 October 2026 and yields change daily. Confirm current figures with Vanguard and iShares before acting.
FAQ: BND vs SGOV
Is SGOV safer than BND?
Against interest-rate risk, yes, by a wide margin. SGOV's effective duration was 0.11 years against BND's 5.7 years, and in 2022 SGOV returned 1.58% while BND lost 13.15%. SGOV also holds only Treasuries, while BND holds corporate and mortgage bonds as well. The trade-off is lower long-run income when rates fall.
Why does BND pay a higher yield than SGOV?
Because it holds longer bonds and some corporate credit. On 1 October 2026 BND's 30-day SEC yield was 5.07% against SGOV's 3.70%. That extra income compensates for price swings like 2022's.
Should I replace BND with SGOV?
Only if you have decided you no longer want a long-term bond allocation. SGOV is a cash substitute. If rates fall, its yield falls with them within weeks, while BND would gain in price.
Do BND and SGOV overlap?
No. Our checker shows 0%. Both own US Treasuries, but SGOV's bills mature within three months, and BND only holds bonds with more than a year to maturity, so no individual bond is held by both.
How much did BND lose in 2022?
13.15% at NAV, per its summary prospectus. Its worst quarter in the chart period was the first quarter of 2022, at -5.94%.
Is it reasonable to hold both BND and SGOV?
Yes. They do different jobs: SGOV for cash you may need soon, BND for bonds you plan to hold for years. Holding both duplicates nothing.
Which is better in a taxable account?
For cash, SGOV, because nearly all its income is Treasury interest and may be exempt from state tax depending on your state. For a long-term bond allocation, consider where you hold it: both funds' dividends are taxed federally as ordinary income each year in a taxable account, while inside an IRA or 401(k) that tax is deferred or, in a Roth, generally avoided.
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"BND vs SGOV: A Core Bond Fund and a Cash Fund Do Different Jobs." Wealthy Pot, 2026. https://wealthypot.com/bnd-vs-sgov/
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