The age-old adage that “Treasury bonds are for safety” is misleading when you consider the sheer variety within this segment of fixed income.
While all U.S. Treasury securities are backed by the full faith and credit of the U.S. government, their risk and return profiles can vary dramatically based on maturity length.
Treasury bonds come in a wide range of maturities. On one end of the spectrum are Treasury bills (T-bills), which mature in less than a year. On the other end are long-term Treasury bonds, which can have maturities of 10, 20 or even 30 years.
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While both have ironclad credit quality and virtually no risk of default, their interest rate sensitivity is vastly different. Treasury bond prices move inversely to bond yields, but the impact isn’t uniform across the yield curve.
Short-term Treasurys are more affected by changes in the Federal Reserve’s monetary policy, while long-term Treasurys respond to macroeconomic expectations about gross domestic product, inflation and shocks — such as the potential tariffs from a second Trump administration.
“Considering ongoing U.S. economic growth, sticky inflation and the Trump administration’s policies, our view is that investors should stay short in duration in their Treasury exposure, as we expect continued heightened volatility at the long end of the Treasury curve,” says JoAnne Bianco, partner and senior investment strategist at BondBloxx.
If you agree with this perspective, then accessing short-term Treasurys through an exchange-traded fund (ETF) can provide safety of principal while delivering monthly income.
“Treasury ETFs allow investors to gain exposure through a stock-like instrument that trades on market exchanges,” says Tiana Patillo, financial advisor manager at Vanguard. “A Treasury ETF can provide greater liquidity, diversification and lower transaction costs.”
Here are seven of the best Treasury ETFs to buy in 2025:
| Fund | Expense ratio | Yield to maturity |
| Global X 1-3 Month T-Bill ETF (ticker: CLIP) | 0.07% | 3.7% |
| iShares 0-3 Month Treasury Bond ETF (SGOV) | 0.09% | 4.3% |
| Vanguard Short-Term Treasury ETF (VGSH) | 0.03% | 4.3% |
| BondBloxx Bloomberg One Year Target Duration U.S. Treasury ETF (XONE) | 0.03% | 4.3% |
| BondBloxx Bloomberg Six Month Target Duration U.S. Treasury ETF (XHLF) | 0.03% | 4.3% |
| Simplify Treasury Option Income ETF (BUCK) | 0.36% | 4.1%* |
| Xtrackers U.S. 0-1 Year Treasury ETF (TRSY) | 0.06% | 4.3%* |
*30-day SEC yield.
Global X 1-3 Month T-Bill ETF (CLIP)
“Key things to watch for include yield to maturity, which measures the expected return of the ETF assuming all bonds are held until maturity; and duration, which measures the sensitivity of the ETF’s price to changes in interest rates,” says Rohan Reddy, director of research at Global X ETFs. Both of these mechanics can easily be understood with CLIP, which holds T-bills.
A very low 0.1-year duration means that CLIP’s net asset value (NAV) is insulated from changes in short-term interest rates. The current 3.7% yield to maturity provides a theoretical measure of total return for investors. This ETF is also very liquid, with a minimal 0.01% 30-day median bid-ask spread, thanks to how heavily traded T-bills are. CLIP charges a low 0.07% expense ratio.
iShares 0-3 Month Treasury Bond ETF (SGOV)
SGOV is a longstanding competitor to CLIP. With more than $33 billion in assets under management (AUM), it is one of the most popular T-bill ETFs on the market. It tracks the ICE 0-3 Month U.S. Treasury Securities Index. This gives the ETF similar exposure to CLIP, albeit with a slightly larger bias toward the short end of the yield curve. However, it is a hair pricier as well, with a 0.09% expense ratio.
Currently, investors can expect a 0.1-year duration from SGOV’s portfolio against a 4.3% yield to maturity. As with most bond ETFs, SGOV distributes income on a monthly basis. The ETF typically does ex-distribution at the start of a month, with the distribution payable a few days later. Liquidity is also a hallmark of SGOV thanks to a very low 0.01% 30-day median bid-ask spread.
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Vanguard Short-Term Treasury ETF (VGSH)
“Treasurys are perceived to be the safest security available given their extremely low probability of default, as they’re backed by the full faith and credit of the U.S. Treasury Department,” says Jeffrey Johnson, principal and head of fixed-income product at Vanguard. Unlike corporate bonds, there is virtually no risk that the borrower, the U.S. government itself, will default on its obligations.
For short-term Treasury exposure, Vanguard offers VGSH. This ETF tracks the Bloomberg U.S. Treasury 1–3 Year Bond Index. With a duration of 1.9 years, it is more sensitive than CLIP when it comes to interest rate changes. However, it does pay a higher 4.3% yield to maturity. As with most Vanguard funds, VGSH is also very affordable. The ETF currently charges a minimal 0.03% expense ratio.
BondBloxx Bloomberg One Year Target Duration U.S. Treasury ETF (XONE)
“Chairman Powell bought the Fed time to assess their next steps for monetary policy with recent statements that officials are not in a hurry to lower interest rates further,” Bianco says. “This means the Fed can wait for additional progress on inflation and assess the economic impacts of the Trump administration’s policies on tariffs, immigration and taxes before they move again.”
For exposure to short-term Treasurys, BondBloxx offers XONE, which offers more precise exposure compared to VGSH. This ETF tracks the Bloomberg U.S. Treasury One Year Duration Index, which has a duration of one year against a 4.3% yield to maturity. It is very liquid, with a 0.02% 30-day median bid-ask spread, and competes well against VGSH when it comes to fees, with a 0.03% expense ratio.
BondBloxx Bloomberg Six Month Target Duration U.S. Treasury ETF (XHLF)
Investors looking for exposure to even shorter-maturity Treasurys can use XHLF in lieu of XONE. “This six-month target duration Treasury ETF is one of our top picks for 2025 because we like the combination of attractive income potential and low volatility compared to longer-dated U.S. Treasurys,” Bianco explains. “Investors looking to manage cash positions and maintain liquidity should consider XHLF.”
As with XONE, XHLF’s exposure to the yield curve is very precise. By tracking the Bloomberg U.S. Treasury Six Month Duration Index, the ETF delivers a 0.5-year duration against a 4.3% yield to maturity. As with XONE, it is very liquid, with a 0.02% 30-day median bid-ask spread, and also affordable with a minimal 0.03% expense ratio. ETFs like XHLF can be a great substitute for money market mutual funds.
Simplify Treasury Option Income ETF (BUCK)
“BUCK is a yield-enhanced T-bill ETF that seeks the highest total returns while targeting a duration of one year or less with no credit risk,” explains Jason England, managing director, portfolio manager and fixed-income specialist at Simplify. “BUCK enhances yield via structural alpha by selling options on Treasurys with a yield target of 1% to 2% higher than the Bloomberg U.S. Treasury Bill 1-3 Months Index.”
BUCK’s 0.36% expense ratio may seem pricey compared to passive ETFs, but it is still very reasonable and competitive for an active options-selling ETF. In the current market environment, this strategy could help investors earn higher yield while still keeping risk low. Despite the active use of options, BUCK remains as liquid as most passive Treasury ETFs, evidenced in part by its low 0.04% 30-day median bid-ask spread.
Xtrackers U.S. 0-1 Year Treasury ETF (TRSY)
“TRSY can serve as a cash management alternative to traditional savings accounts while offering a hedge against interest rate fluctuations,” notes Arne Noack, regional investment head, Xtrackers, Americas, at DWS Group. “Additionally, it is competitively priced, with an expense ratio of 0.06%.” This ETF currently tracks the ICE U.S. Treasury Short Bond Index, a popular fixed-income benchmark.
Unlike money market mutual funds, shares of TRSY can be purchased and sold throughout the trading day. Therefore, investors who prioritize intra-day liquidity may find this ETF to be a worthwhile alternative. However, it’s important to understand that unlike money market funds, the net asset value of TRSY can fluctuate and is not pegged at $1, so there is some minimal volatility expected. One thing to note with this fund is that it’s newer than the others on this list, with a short history dating back to October 2024. As the new kid on the block with just $3.6 million in net assets, you can expect TRSY to be less liquid than many of its peers above.
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7 Best Treasury ETFs to Buy Now originally appeared on usnews.com
Update 02/11/25: This story was published at an earlier date and has been updated with new information.
