SHY vs VGSH

SHYBiShares 1-3 Year Treasury Bond ETF

VGSHAVanguard Short-Term Treasury ETF

In short

SHY The incumbent slice of the short Treasury curve: about 90 U.S. government notes maturing in one to three years, running since 2002, heavily traded, paying monthly. The established name in its aisle, priced like it.

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

SHY The fund seeks to track an index of U.S. Treasury bonds with remaining maturities of one to three years, providing targeted exposure to short-term government debt.

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

Why people hold it

• SHY Pure mandate: the ICE U.S. Treasury 1-3 Year Bond Index, nothing else. Tracking has been about as tight as index funds get, and the credit behind the bonds is the U.S. government's.ishares.com
• Big and busy: a multi-billion-dollar fund that trades actively, so moving in and out of a cash-like sleeve rarely costs much in spread.
• One-to-three-year maturities mean smaller price moves when rates shift than long bonds see, and cash lands monthly rather than quarterly.
• Live since 2002 under iShares, through several full rate cycles, doing the same simple job the whole way.

• 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

• SHY Fees are the trade-off: 0.15% here versus 0.03% at VGSH, SCHO and SPTS. BBSB tracks the identical index for 0.04%.
• Treasuries only, short end only. No corporate credit, no long-duration kicker. The plain end of the bond market, by design.
• Short bonds are not a savings account. Prices still dip when short-term rates rise, and the monthly payout floats with them.

• 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 SHY profile⁠

Full VGSH profile⁠