SGOV ETF Review - Is SGOV a Good Investment for T-Bills in 2024? (2024)

Last Updated: July 21, 2023 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 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 says
July 2, 2023 at 11:03 am
Hi 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
May 18, 2023 at 6:14 pm
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:
https://www.ustreasuryetf.com/etf/tbil/
Reply
- John Williamson, APMA® says
  May 19, 2023 at 12:29 am
  Unlikely, but possible I suppose. Even without the waiver, SGOV would still be cheaper than TBIL.
  Reply
Brent says
February 23, 2023 at 2:37 pm
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