Low Risk Treasury Bill ETFs Are Now Yielding 5% and Above

SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)

As of September 25, investors who buy BIL can expect an average yield to maturity of 5.35%, with a duration of just 0.09 years. In other words, you're earning a decent yield for what amounts to virtually no interest rate risk – all backed by the ironclad credit rating of the U.S. government. 

Like most bond ETFs, BIL pays out distributions on a monthly basis, as opposed to individual T-bills that are auctioned at a discount and payout their par value at maturity, with the difference representing the interest accrued and owed to investors. The ETF charges a 0.1354% expense ratio. 

iShares 0-3 Month Treasury Bond ETF (SGOV)

To compete with BIL, iShares launched SGOV in May 2020, and it has accumulated just over $15 billion in AUM since its debut. This ETF tracks the ICE 0-3 Month US Treasury Securities Index, which goes even further down the short end of the yield curve compared to BIL.

That being said, the ETF's metrics are fairly similar. We're also looking at a duration of 0.09 years against an average yield to maturity of 5.39%. Like BIL, SGOV also pays out monthly distributions. Interestingly enough, SGOV's credit quality is listed as "AA rated," likely due to the recent Fitch downgrade.

To entice BIL investors over, iShares has implemented a fee waiver for SGOV, down from a gross 0.13% expense ratio to a net 0.07% expense ratio. According to iShares, this waiver will remain in place until the end of June 2024. 

Global X 1-3 Month T-Bill ETF (CLIP)

The newest competitor in the T-bill ETF space is CLIP, launched by Global X in June 2023 in a departure from their usual derivative income and thematic equity focused lineup. This ETF looks to track the Solactive 1–3-month US T-Bill Index and currently has 27 holdings. 

In terms of portfolio metrics, you get something similar to BIL and SGOV, with a duration of 0.11 years and a yield to maturity of 5.51%, the highest of the trio so far, but keep in mind that this can fluctuate. Like BIL and SGOV, CLIP will also make monthly distributions.

In terms of fees, CLIP rivals SGOV with a 0.07% expense ratio. However, this is without any contractual waivers in place, making it arguably the cheapest priced among the trio. Having crossed the $50 million AUM threshold, this ETF now has a much lower risk of being closed down. 

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.