BWZ vs SCHO

BWZCSPDR Bloomberg Short Term International Treasury Bond ETF

SCHOASchwab Short-Term U.S. Treasury ETF

In short

BWZ The odd one out on the short-Treasury shelf. BWZ skips Uncle Sam and buys 1-3 year government bonds from the rest of the world, spread across a few hundred issues with index caps so no single country runs the show.

SCHO Short Treasuries, stripped to the studs: roughly 100 US government bonds maturing in one to three years, wrapped in a 0.03% fee. Running since 2010, and one of the tighter builds in its corner of the bond market.

Stated mandate

BWZ The fund seeks to track, before fees and expenses, the price and yield performance of the Bloomberg 1-3 Year Global Treasury ex-US Capped Index.

SCHO The fund seeks to track, before fees and expenses, the total return of an index representing the short-term U.S. Treasury bond market.

Why people hold it

• BWZ Buys where its shelf-mates don't: short-dated sovereign debt issued outside the US, with index caps that keep one country from dominating the basket.
• About 300 bonds, all parked in the 1-3 year slice of the curve, the corner of government debt where rate swings bite least.
• Running since 2009 under State Street's SPDR banner, through several full rate cycles, and it pays monthly.

• SCHO 0.03% a year, a fifth of the 0.15% on the category's best-known fund, SHY. When every fund in the aisle owns the same Treasuries, the fee is the main lever.
• Pure government paper: the Bloomberg US Treasury 1-3 Year Index, tracked very closely. No corporate bonds, no credit spread dressed up as yield.schwabassetmanagement.com
• A multi-billion-dollar fund that trades actively and pays income monthly, so entering and exiting rarely means wrestling the spread.
• Live since 2010 and among the strongest implementations in the short-Treasury peer group, which matters in a slice of the market where execution is the whole game.

Worth knowing

• BWZ Costs 0.35% a year. The plain US short-Treasury funds it gets shelved beside (VGSH, SCHO, SPTS) charge 0.03%.
• Filed with 1-3 year Treasury funds, but the holdings are foreign governments. Expect it to move on its own schedule, not in step with SHY and company.
• Mid-sized and moderately traded rather than a volume monster, so the spread you pay matters more here than in the giant short-Treasury names.

• SCHO Bonds, not cash. One to three year maturities still reprice when rates move, so the share price wobbles instead of sitting flat.schwabassetmanagement.com
• Income floats with short-term Treasury yields rather than locking in, so the monthly payout moves up and down as rates do.
• The 0.03% fee is a three-way tie with VGSH and SPTS, and VGSH tracks the identical index, so cost alone will not separate them.

Full BWZ profile⁠

Full SCHO profile⁠