SCHO vs UTWO

SCHOASchwab Short-Term U.S. Treasury ETF

UTWOBUS Treasury 2 Year Note ETF

In short

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.

UTWO Most short Treasury funds hand you a 1-3 year blend. UTWO aims at a single spot on the curve, the 2-year note segment, and pays monthly. A precision tool from F/m, on the market since 2022.

Stated mandate

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.

UTWO The fund is designed to provide exposure to the U.S. Treasury 2-year note segment. It may invest up to 20% of assets outside its underlying index when the adviser believes those investments will improve tracking.

Why people hold it

• 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.

• UTWO Targets one point on the yield curve, the 2-year note segment, instead of a 1-3 year mixture. Your duration lands where you pointed it.
• Hews closely to its stated Treasury mandate, with very little drift between what the prospectus promises and what the fund actually holds.
• Distributions arrive monthly, a steadier cadence than the twice-a-year coupon rhythm of the underlying Treasury paper.
• The 0.15% fee sits right at the median for short Treasury ETFs, matching what iShares charges on SHY.

Worth knowing

• 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.

• UTWO Median is not cheap here. The broad index giants (VGSH, SCHO, SPTS) run 0.03%, so the curve precision costs you roughly five times their fee.
• The fund may hold up to 20% of assets outside its index when the adviser believes it improves tracking, so exposure is not locked to a single note.
• A 2022 launch and a mid-size asset base mean a shorter record and thinner trading than the decades-old 1-3 year stalwarts in the group.

Full SCHO profile⁠

Full UTWO profile⁠