Wealthy PotSGOV vs VGSH: 3-Month Bills or 1-3 Year Treasuries?
Table of Contents
The Short Answer
- Both hold only Treasuries, but different ones. SGOV holds bills that mature within three months. VGSH holds notes that mature in one to three years. On their 31 May 2026 filings they shared no securities.
- Duration is the difference. SGOV's effective duration was 0.11 years on 1 October 2026. VGSH's average duration was 1.9 years on 31 August 2026. As a hypothetical rule of thumb, a one-point rise in rates would cost VGSH about 1.9% in price and SGOV about 0.1%.
- 2022 vs 2025 shows both sides. As rates rose in 2022, VGSH lost 3.86% and SGOV gained 1.58%. In 2025, VGSH returned 5.11% to SGOV's 4.24%.
- VGSH yields more right now. 30-day SEC yields on 1 October 2026 were 4.67% for VGSH and 3.70% for SGOV.
- VGSH is cheaper. 0.03% against 0.09%, $6 a year less per $10,000.
- The choice is about time. Money you may need within months belongs in SGOV. Money you can leave for two years or more can earn VGSH's higher yield and ride out its price swings.
Overlap: 0%, No Bond in Common
Our Portfolio Overlap Checker puts SGOV and VGSH at 0% overlap. Both funds hold almost nothing but US Treasury debt, and VGSH's remaining 1% was cash. But the checker matches Treasuries bond by bond, using each security's CUSIP, and the two funds share none. On their SEC Form N-PORT filings for 31 May 2026:
- SGOV held 22 Treasury bill positions maturing between 2 June and 27 August 2026.
- VGSH held 91 Treasury positions maturing between 15 May 2027 and 30 April 2029. Vanguard's own count on 31 August 2026 was 92 bonds.
There is no maturity in common, so there can be no bond in common. SGOV's index covers Treasuries "that have a remaining maturity of less than or equal to three months." VGSH's index, the Bloomberg U.S. Treasury 1-3 Year Index, covers Treasuries "all with maturities between 1 and 3 years." Same issuer, very different behaviour.
SGOV vs VGSH, Side by Side
| SGOV | VGSH | |
|---|---|---|
| Full name | iShares 0-3 Month Treasury Bond ETF | Vanguard Short-Term Treasury ETF |
| Index | ICE 0-3 Month US Treasury Securities Index | Bloomberg U.S. Treasury 1-3 Year Index |
| What it holds | Treasury bills, 3 months or less | Treasury notes, 1 to 3 years |
| Expense ratio | 0.09% | 0.03% |
| Prospectus cost example, $10,000 over 10 years | $115 | $39 |
| Holdings | 22 T-bill positions (N-PORT, 31 May 2026) | 92 bonds (31 Aug 2026) |
| Duration | 0.11 years effective (1 Oct 2026) | 1.9 years average (31 Aug 2026) |
| Average maturity | 0.11 years (1 Oct 2026) | 2.0 years effective (31 Aug 2026) |
| 30-day SEC yield, 1 Oct 2026 | 3.70% | 4.67% |
| 2022 calendar return | +1.58% | -3.86% |
| Worst calendar quarter in prospectus chart | 0.00% (Q4 2021) | -2.51% (Q1 2022) |
| Net assets | $113.1 billion (2 Oct 2026) | $39.3 billion whole fund; $35.1 billion ETF class (31 Aug 2026) |
| Price, 2 Oct 2026 | $100.43 NAV | $57.43 NAV |
| Inception | 26 May 2020 | 19 November 2009 |
VGSH is a share class, not a standalone fund. Its prospectus calls it "an exchange-traded share class of Vanguard Short-Term Treasury Index Fund." The fund's portfolio manager is Joshua C. Barrickman, who also runs Vanguard's total bond market fund.
Three Months vs Two Years of Duration
Duration estimates how far a bond fund's price moves when rates change. Using the usual rule of thumb, and purely as a hypothetical illustration: if rates across the short end rose one percentage point, VGSH's price would fall roughly 1.9% and SGOV's roughly 0.1%. If rates fell one point, VGSH would gain about 1.9% and SGOV would barely move.
Income works the other way round. VGSH's prospectus warns: "During periods of falling interest rates, the Fund's income may decline. The income paid by shorter-term bonds is subject to a higher degree of fluctuation than the income paid by longer-term bonds." SGOV is the extreme case of that. Its bills all mature within three months, so when the Fed cuts, SGOV's yield follows within weeks. VGSH has locked in rates on notes running one to three years, so its income falls more slowly.
So the two funds hedge different risks. SGOV protects the value of your money; VGSH protects its income for a while longer.
Returns When Rates Rose and Fell
| Calendar year, total return at NAV | SGOV | VGSH | Ahead |
|---|---|---|---|
| 2021 | 0.02% | -0.64% | SGOV |
| 2022 | 1.58% | -3.86% | SGOV |
| 2023 | 5.13% | 4.29% | SGOV |
| 2024 | 5.28% | 4.02% | SGOV |
| 2025 | 4.24% | 5.11% | VGSH |
Vanguard's profile splits VGSH's annual return into price and income, and that shows the mechanism. In 2022, VGSH's capital return was -4.95% and its income return 1.09%: the price drop overwhelmed the interest. In 2025, its capital return was +0.98% on top of 4.13% of income, and that price gain is what put it ahead of SGOV. In 2023 and 2024, VGSH's income return was 3.42% and 4.26%, below SGOV's total returns of 5.13% and 5.28%.
Compounding the five calendar returns above, $10,000 at the start of 2021 would have grown to about $11,720 in SGOV and about $10,890 in VGSH by the end of 2025. That is our arithmetic on the published yearly figures, before tax, and a hypothetical illustration. It also reflects one particular five years, which began with rates near zero. Before SGOV had a full calendar year, in 2019 and 2020, VGSH returned 3.52% and 3.12%.
Most recently, Vanguard's profile showed VGSH at -0.18% at NAV for the three months to 30 September 2026, and +0.48% for the year to date.
Past performance does not guarantee future results. This is educational information, not personalised investment advice.
Fees, Yield and Tax
Fees. VGSH charges 0.03% and SGOV 0.09%. On $10,000, that is $3 against $9 a year. Small, but it runs in VGSH's favour.
Yield. On 1 October 2026 VGSH's 30-day SEC yield was 4.67% and SGOV's 3.70%, a gap of 0.97 points. That gap is not guaranteed income. It is the market paying more for two-year money than for three-month money on that day, and it can shrink or reverse. In 2023 and 2024 SGOV's return was the higher one.
Tax. Both funds hold Treasuries, so the state-tax treatment is the same in principle. Interest on US government obligations is exempt from state and local income tax under 31 U.S.C. § 3124, and IRS Publication 550 says Treasury interest "is exempt from all state and local income taxes." Whether that exemption passes through a fund's dividends to you depends on your state, as SGOV's prospectus notes: "Certain states and localities may exempt from tax distributions attributable to interest from U.S. federal government obligations." Federally, both funds' distributions are taxable. We give no percentage of either fund's income from US government obligations, because we did not pull the issuers' tax-year documents.
Which One Fits Your Money?
- Emergency fund, or cash you may need any month: SGOV. A 2022-style year would have cost VGSH holders 3.86%, the wrong outcome for money you may need to spend.
- Money for a known bill 6 to 12 months away: SGOV, or a Treasury bill or CD matched to the date. See CDs vs Treasury bills.
- Money you will not touch for two years or more: VGSH. Its price can drop when rates rise, but its notes mature within three years and are replaced at whatever rates then apply, and it costs less.
- You expect the Fed to cut: VGSH keeps its yield longer and gains in price if rates fall. That is what happened in 2025. If you are wrong, 2022 is the downside.
- The short-term slice of a retirement bond allocation: VGSH fits the role. For a whole-market bond fund instead, see BND vs SGOV.
- Holding both: reasonable, unlike most pairs. They hold no bonds in common, so a mix is a way to spread your cash across maturities, like a short Treasury ladder.
If you want SGOV-like safety with a coupon tied to the weekly bill auction, see SGOV vs USFR. For how bills and notes differ as securities, see Treasury bills, notes and bonds, and for inflation-protected savings, I bonds.
Sources & Methodology
Every figure on this page was read from the primary source named below. Fees 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. No figure came from a data aggregator or another comparison site.
- 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, and the state-tax sentence.
- Vanguard Short-Term Treasury ETF (VGSH), Summary Prospectus dated 19 December 2025, as supplemented 30 June 2026 (Form 497K, Vanguard Scottsdale Funds, SEC EDGAR): the 0.03% fee, cost example, index, share-class language, income risk wording, portfolio manager, calendar-year returns to 2024 and worst quarter.
- iShares SGOV product page: 30-day SEC yield, effective duration and maturity as of 1 October 2026; net assets and NAV as of 2 October 2026.
- Vanguard VGSH profile: 30-day SEC yield as of 1 October 2026; characteristics as of 31 August 2026; 2025 annual return and its capital and income split as of 31 December 2025; returns to 30 September 2026.
- SEC Form N-PORT for both funds, period ended 31 May 2026, read by our Portfolio Overlap Checker and matched 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 adds up, for every holding both funds own, the smaller of its two weights. It matches US Treasuries by CUSIP, the identifier of each individual security, which produces 0% here.
This article is for general education only and is not investment, tax or legal advice. Both funds can lose money and trade at market prices that differ from net asset value; VGSH fell 3.86% in 2022. 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 iShares and Vanguard before acting.
FAQ: SGOV vs VGSH
Is VGSH riskier than SGOV?
Yes, for price. VGSH's duration was 1.9 years against SGOV's 0.11, and VGSH lost 3.86% in 2022 while SGOV gained 1.58%. Both hold only US Treasuries, which SGOV's prospectus notes "are backed by the full faith and credit of the United States."
Why does VGSH yield more than SGOV?
On 1 October 2026 the market was paying more for 1-3 year Treasuries than for 3-month bills: VGSH's 30-day SEC yield was 4.67% and SGOV's 3.70%. That can change; in 2023 and 2024 SGOV returned more.
Which is better when the Fed cuts rates?
Usually VGSH. Its notes keep paying their locked-in rates for longer, and their prices rise as rates fall. In 2025 VGSH returned 5.11% to SGOV's 4.24%. SGOV's yield drops within weeks of a cut.
Do SGOV and VGSH overlap?
No. Our checker shows 0%. Both hold only US Treasury debt, but on their 31 May 2026 filings they shared no securities. SGOV's bills matured by August 2026 and VGSH's notes from May 2027 onwards.
Can I use VGSH as an emergency fund?
It is a poor fit. A year like 2022, when it lost 3.86%, is exactly when you might need the money. SGOV, a money market fund or a high-yield savings account fits better.
Which is cheaper?
VGSH, at 0.03% against SGOV's 0.09%.
Are SGOV and VGSH exempt from state tax?
Treasury interest is exempt from state and local income tax under 31 U.S.C. § 3124. Whether that carries through a fund's dividends depends on your state. Both funds' distributions are taxed federally.
Cite This Page
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"SGOV vs VGSH: 3-Month Bills or 1-3 Year Treasuries?" Wealthy Pot, 2026. https://wealthypot.com/sgov-vs-vgsh/
Related comparisons: SGOV vs USFR · BND vs SGOV · BIL vs SGOV · CDs vs Treasury bills · All ETF comparisons
