FTSD vs VGSH

FTSDCFranklin Short Duration U.S. Government ETF

VGSHAVanguard Short-Term Treasury ETF

In short

FTSD Most short-government ETFs just clone a 1-3 year Treasury index. FTSD's mandate is wider: at least 80% in U.S. government, agency or instrumentality debt, run for current income and capital preservation since 2013.

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

FTSD The Fund seeks high current income consistent with prudent investing and capital preservation, investing at least 80% of net assets in U.S. government, agency, or instrumentality securities.

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

Why people hold it

• FTSD The mandate reaches past plain Treasuries into agency and instrumentality paper, with at least 80% of net assets in government-backed debt and a stated goal of income plus capital preservation.
• Short duration by design, so a swing in rates moves it far less than a long bond fund does. Franklin has been running this one since 2013.
• Income lands monthly, and the fund has stuck closely to the mandate its prospectus describes.

• 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

• FTSD 0.25% a year, above the 0.15% cohort median. The big index trackers (VGSH, SCHO, SPTS) charge 0.03%, so the broader government mandate carries a real price tag.
• Thinly traded next to the category heavyweights, which can mean wider spreads on the way in and out.
• The stated aim is current income and capital preservation, not capital growth. This is a short-end parking spot, and it behaves like one.

• 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 FTSD profile⁠

Full VGSH profile⁠