SGOV vs BIL: Which Treasury ETF for Your Emergency Fund?

The Short Answer

Quick comparison

What's the real difference?

Both SGOV and BIL are Treasury ETFs designed for cash management — parking money that needs to be safe, liquid, and earning current interest rates. The key difference is duration:

• SGOV holds 1-3 month Treasuries. It's closer to cash than anything else in an ETF wrapper. Duration is 0.17 years — meaning if rates move 1%, the fund price moves ~0.17%. Virtually no risk.
• BIL holds 7-12 month Treasuries. Duration is 0.58 years — if rates move 1%, the fund price moves ~0.58%. Still low risk, but not quite as safe as SGOV.

This matters because Treasury ETFs are subject to interest rate risk. When rates rise, bond prices fall (and vice versa). SGOV's shorter duration means it's barely affected. BIL is slightly more sensitive.

Yield comparison

Current yields are nearly identical because the Treasury yield curve is relatively flat at the short end. SGOV typically yields 0.5-1% higher than BIL in normal rate environments, but this flips when the yield curve inverts.

The difference is usually less than 0.25% annually — which matters on a $1M portfolio ($2,500/year) but is negligible for most individual investors.

Tax treatment

Both funds distribute interest income that is:

• Federal tax-exempt — Treasury interest is exempt from federal income tax
• State/local taxable — except in states that don't tax bond interest (like Texas and Florida)

Liquidity

Both trade heavily with tight bid-ask spreads. SGOV has higher AUM (~$30B vs ~$8B) and typically tighter spreads, but both are easy to buy and sell during market hours.

Which belongs in the Five Fund Frame?

For your Park slot — the safety cushion for emergencies — SGOV is the better choice. Here's why:

• Lower duration = less interest rate risk. Your emergency fund needs to be as close to cash as possible.
• Lower expense ratio = 0.09% vs 0.14%. Every basis point counts on cash holdings.
• Larger AUM = better liquidity and tighter spreads over time.
• Monthly distributions align with bill-paying cycles, making it easier to track your safety cushion.

BIL isn't wrong — it's just slightly more exposed to interest rate risk than you need for emergency funds. If you're comfortable with 0.58 years of duration, BIL's slightly longer holdings can offer marginally higher yield in some environments. But for a true emergency fund, SGOV is the safer bet.