Best Short Term Treasury ETF

Introduction

Concerned about inflation and market volatility in 2025? Many investors are steering away from volatile assets and turning to safer alternatives like short-term Treasury ETFs. These funds provide access to U.S. government debt with maturities typically ranging from a few weeks to five years.

Short-term Treasury ETFs are popular because they offer liquidity, lower interest rate sensitivity, and consistent income with minimal risk. They’re an ideal choice for conservative investors, cash managers, or anyone looking to park funds temporarily while waiting for better market conditions.

This guide presents a curated list of the top-performing short-term Treasury ETFs in 2025, covering each fund’s features, strategy, and suitability based on yield, duration, fees, and investor goals.

Top Short-Term Treasury ETFs in 2025

1. iShares Short Treasury Bond ETF (SHV)

Focus: U.S. Treasury bills with ≤ 1-year maturity

• Expense ratio: 0.15%
• Tracks Bloomberg U.S. Treasury Bill Index
• Highly liquid, minimal volatility
• Use Case: Capital preservation and cash-like access

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

Focus: Treasury bills maturing in 1–3 months

• Expense ratio: 0.14%
• Very low interest rate sensitivity
• Competitive yield vs. savings accounts
• Use Case: Short-term fund parking and institutional cash management

3. Vanguard Short-Term Treasury ETF (VGSH)

Focus: U.S. Treasuries maturing in 1–3 years

• Expense ratio: 0.04%
• Low duration, low volatility
• Vanguard’s trusted management
• Use Case: Conservative investors seeking predictable income

4. Schwab Short-Term U.S. Treasury ETF (SCHO)

Focus: Treasury bonds with 1–3 year maturities

• Expense ratio: 0.03%
• Tax-efficient redemptions
• Broad U.S. debt exposure
• Use Case: Taxable accounts and fee-conscious investors

5. Invesco Ultra Short Duration ETF (GSY)

Focus: Investment-grade debt (Treasuries + corporate)

• Expense ratio: 0.25%
• Higher yield due to corporate bond mix
• Low average duration
• Use Case: Conservative investors seeking yield beyond Treasuries

6. Northern Trust Enhanced Cash Government Fund (NTEGX)

Focus: Government debt and selected corporate paper

• Expense ratio: 0.30%
• Actively managed
• Emphasizes liquidity and income
• Use Case: Stable income during market uncertainty

7. Franklin Liberty U.S. Treasury Target Duration ETF (FLGV)

Focus: Euro-denominated Treasuries with set durations

• Expense ratio: 0.09%
• Designed for inflation hedging
• Adds international diversification
• Use Case: Tactical exposure and duration targeting

8. PIMCO Enhanced Short Maturity ESG Bond ETF (PARS)

Focus: ESG-screened short-term bonds

• Expense ratio: 0.36%
• Combines ESG goals with active management
• Strong compliance with sustainability standards
• Use Case: Income with environmental/social impact

9. Harmonic Capital GNMA II Covered Call ETF (LC02)

Focus: GNMA-backed MBS + covered call strategy

• Expense ratio: 0.50%
• Generates monthly income
• Government-backed loan base
• Use Case: Fixed-income investors seeking equity-like returns

10. JPMorgan BetaBuilders 1-5 Year U.S. Treasury ETF (BBUS)

Focus: 1–5 year Treasury ladder

• Expense ratio: 0.05%
• Passive exposure to medium-short duration
• Reliable under macro volatility
• Use Case: Intermediate-term fixed income holding

11. Vanguard Ultra-Short-Term Bond ETF (VUSB)

Focus: Government and corporate bonds under 2 years

• Expense ratio: 0.10%
• Balanced yield and duration
• Vanguard’s low-fee structure
• Use Case: Conservative portfolios aiming for steady income

12. WisdomTree Floating Rate Treasury ETF (FLOT)

Focus: U.S. Treasury notes with floating rates

• Expense ratio: 0.15%
• Rate resets every quarter
• Low credit risk, inflation protection
• Use Case: Hedging against interest rate hikes

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Quick Comparison Table

Conclusion

Short-term Treasury ETFs are playing a bigger role in portfolio planning for 2025. Their ability to offer low-risk income, strong liquidity, and tax benefits makes them ideal tools for conservative or uncertain investment strategies.

Whether you’re parking cash temporarily, managing risk, or looking for ESG-aligned exposure, there’s a Treasury ETF tailored to your goals. From ultra-safe funds like SHV and BIL to slightly more aggressive options like GSY or LC02, investors can build a resilient income foundation that performs even during market stress.

Frequently Asked Questions

What are short-term Treasury ETFs?

These ETFs invest in U.S. government debt with maturities ranging from a few weeks to five years. They’re designed for capital preservation and steady income.

Are Treasury ETFs safer than corporate bond ETFs?

Yes. Treasury ETFs are backed by the U.S. government, making them far less risky than corporate bond ETFs, which depend on individual company credit.

Do short-term Treasury ETFs lose value?

They can experience minor price fluctuations due to interest rate changes, but their short durations and strong credit backing help maintain value.

Are Treasury ETFs taxable?

Interest income is federally taxable but often exempt from state and local taxes, especially with funds like SCHO.

Which Treasury ETF has the highest yield?

Options like GSY and LC02 offer higher yield potential due to corporate or MBS exposure but carry slightly more risk.

Can Treasury ETFs beat inflation?

Floating-rate ETFs like FLOT and targeted-duration funds like FLGV are designed to help hedge against rising inflation and interest rates.

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Reviewed and edited by Albert Fang.

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Article Title: Best Short Term Treasury ETF

https://fangwallet.com/2025/07/15/best-short-term-treasury-etf/

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