The 5 Best T Bill ETFs (Treasury Bills) To Park Cash in 2024 (2024)

T Bills are ultra-short-term treasury bonds backed by the full faith and credit of the U.S. government. Here we'll check out the best T Bill ETFs to buy treasury bills in 2024.

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T Bill ETFs Video

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Introduction – Why T Bills ETFs?

T Bills, short for treasury bills, are just ultra-short-term bonds from the U.S. government. These short bonds with maturities of less than a year are called bills.

Because they're backed by the full faith and credit of the U.S. government, they possess no liquidity risk, credit risk, or default risk inherent of corporate bonds. As such, T Bills are quite literally the “risk-free asset,” as they're called. These special, seemingly boring bonds are considered a “cash equivalent.”

At this point you might be thinking this all automatically means negligible returns from treasury bills, but you'd be wrong. Their annualized historical return from 1928 to 2020 was 3.32%. The average rate of inflation over that period was 3.02%, which means arealreturn (return adjusted for inflation) of 0.3%.

T Bills are sold at a discount and don't pay a coupon like most bonds, so they simply return their face value at maturity. The difference between your purchase price and that face value is your “interest.”

Because they're able to be rolled quickly, T Bills are also a decent inflation hedge. T Bills essentially kept pace with inflation during the double-digit inflation of the 1970’s in the U.S.! T Bills are a great place to park excess cash to be used for near-future liabilities so that you don't lose that purchasing power to inflation.

This might sound crazy, but there have also been extended periods where T Bills outperformed the stock market: the 15 years from 1929 to 1943, the 17 years from 1966-82, and the 13 years from 2000-12. Any purveyor of market history will recognize these periods as being pretty abysmal for stocks.

Stocks and treasury bonds tend to be inversely correlated, meaning when stocks zig, bonds tend to zag. Specifically, treasury bonds are a “flight to safety” asset that investors flock to during stock market turmoil or uncertainty. This has indeed been happening in 2023 so far with T-bill funds seeing record inflows as cautious investors seek yield and a safe haven with recession fears looming. In January 2023, the 3-month treasury bill rate is 4.57%.

T Bill ETFs allow you to avoid having to buy and roll a ladder of individual bonds yourself. Now that you know why treasury bills are attractive for a variety of purposes and audiences, let's check out the best T Bill ETFs with which to buy them.

The 5 Best T Bill ETFs

Below are the 5 best treasury bill ETFs. They vary somewhat in size, effective maturity, and fees.

SHV – iShares Short Treasury Bond ETF

The iShares Short Treasury Bond ETF (SHV) holds T-bills with maturities of 1 year or less. Its average weighted maturity is 4.7 months. This fund has over $14 billion in assets, likely simply because it is the oldest fund on this list. SHV has an expense ratio of 0.15% and seeks to track the Barclays Capital U.S. Short Treasury Bond Index.

BIL – SPDR Bloomberg Barclays 1-3 Month T-Bill ETF

BIL goes shorter than SHV above and holds treasury bills with maturities between 1 and 3 months. As such, BIL has comparatively less interest rate risk than SHV. This fund has over $12 billion in assets and an expense ratio of 0.14%. It seeks to track the Bloomberg Barclays 1-3 Month U.S. Treasury Bill Index.

GBIL – Goldman Sachs Access Treasury 0-1 Year ETF

Think of GBIL as basically a cheaper version of SHV above, holding T-bills with a time to maturity of less than 1 year. The fund seeks to track the FTSE US Treasury 0-1 Year Composite Select Index and has an expense ratio of 0.12%. The fund has nearly $2 billion in assets.

CLTL – Invesco Treasury Collateral ETF

Like SHV and GBIL, CLTL also holds T bills with less than a year left to maturity. It's newer than the other funds already discussed, boasting only about $600 million in assets, but it's also cheaper with an expense ratio of 0.08%. The fund seeks to track the ICE U.S. Treasury Short Bond Index.

SGOV – iShares 0-3 Month Treasury Bond ETF

SGOV from iShares is the newest fund on the list, having launched in May, 2020. It is similar to BIL, holding T-bills with maturities less than 3 months.

It's also the cheapest right now at 0.05%, because the managers have chosen to waive part of its fee, at least temporarily. This has caused the fund to quickly amass nearly $7 billion in assets in its short lifespan thus far. I covered SGOV specifically in a separate post here.

Where To Buy These T Bill ETFs

All the above ETFs for treasury bills should be available at any major broker. My choice is M1 Finance. M1 has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, intuitive pie visualization, and a sleek, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.

Canadians can find the above ETFs on Questrade or Interactive Brokers. Investors outside North America can use eToro or possibly Interactive Brokers.

What do you think of T-bills? Let me know in the comments.

T Bills FAQ's

Lastly, here are some frequently asked questions about T bills.

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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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