BWZ vs VGSH

BWZCSPDR Bloomberg Short Term International Treasury Bond ETF

VGSHAVanguard Short-Term 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.

VGSH Plain one-to-three-year Treasuries for three basis points, running since 2009. No credit story, no active twist: VGSH owns the short end of the government curve and charges about as little as this category allows.

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.

VGSH The fund seeks to track a market-weighted Treasury index with a short-term dollar-weighted average maturity.

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.

• VGSH 0.03% a year, against a 0.15% median for 1-3 year Treasury funds. Same fee floor as SCHO and SPTS, and a fifth of what SHY charges for the same slice of the curve.
• Sticks tightly to the Bloomberg U.S. Treasury 1-3 Year Index, one of the closest-tracking implementations in its peer group.
• Roughly 90 US Treasury issues, sampled to match the index. No corporates, no mortgages, no derivatives overlay: the only credit question is the US Treasury itself.
• Pays monthly, and the income resets as short notes mature and newer ones roll in, so it moves with prevailing short-term rates. A multi-billion-dollar fund that trades actively.

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.

• VGSH Short maturities soften rate moves, they don't erase them. Prices still fall when yields rise, and the fund itself has no maturity date the way a single note does.
• At the short end the cost race is a tie, not a win: SCHO tracks the same index for the same 0.03%. Differences show up in trading and plumbing, not the fee line.
• Nothing here reaches for yield: no corporate credit, no inflation linkage, no long bonds. That narrowness is the design, and it behaves nothing like a core bond fund.

Full BWZ profile⁠

Full VGSH profile⁠