The phrase “full faith and credit of the U.S. government” carries less weight today than it once did. In May 2025, Moody’s downgraded the nation’s long-term credit rating from Aaa to Aa1.
In practical terms, that means a loan to Uncle Sam is now considered less certain to be repaid on time than a loan to either of the two remaining AAA-rated public companies: health care conglomerate Johnson & Johnson (ticker: JNJ) and software giant Microsoft Corp. (MSFT).
[Sign up for stock news with our Invested newsletter.]
The downgrade was the culmination of a decade of rising federal debt, surging interest costs and repeated political deadlocks over the debt ceiling. Federal government shutdowns added to concerns about stability, and while Fitch had already stripped the U.S. of its top rating in August 2023, Moody’s decision confirmed the shift.
Even so, markets have been slow to adjust. U.S. Treasurys remain a popular choice for investors with lower risk tolerance and continue to serve as a portfolio ballast. Many financial advisors and retail investors still build bond ladders directly through the TreasuryDirect.gov website to generate predictable income and preserve capital.
But when packaged into an exchange-traded fund (ETF), Treasury investing becomes even simpler. ETFs trade on brokerages just like stocks do, with transparent bid and ask prices, and they distribute income monthly rather than the semi-annual coupons paid by individual bonds.
Here are seven of the best Treasury ETFs to buy in 2025:
| ETF | Expense ratio | 30-day SEC yield |
| Vanguard Total Treasury ETF (VTG) | 0.03% | 3.9% |
| BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE) | 0.03% | 3.9% |
| WisdomTree Floating Rate Treasury Fund (USFR) | 0.15% | 4.2% |
| SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) | 0.14% | 4.1% |
| F/m US Treasury 10 Year Note ETF (UTEN) | 0.15% | 4.1% |
| iShares 20+ Year Treasury Bond ETF (TLT) | 0.15% | 4.7% |
| iShares 25+ Year Treasury STRIPS Bond ETF (GOVZ) | 0.10% | 4.7% |
Vanguard Total Treasury ETF (VTG)
“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.” For broad Treasury exposure, Vanguard recently launched VTG, which tracks the Bloomberg U.S. Treasury Total Return Unhedged USD Index.
This ETF spans about 278 Treasurys from across the yield curve. Over half the portfolio matures between one to five years, with slightly less than a quarter maturing between five to 10 years. The remainder is held in longer-maturity Treasurys. Overall, this averages to an intermediate duration of 5.7 years, which implies moderate rate sensitivity. VTG pays a 3.9% 30-day SEC yield and charges a 0.03% expense ratio.
BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE)
“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. XONE captures the one-year segment of the Treasury market.
This ETF tracks the BondBloxx Bloomberg One Year Target Duration US Treasury ETF. This makes the ETF’s net asset value less sensitive to changes in interest rates. Its 30-day SEC yield of 3.9% closely follows prevailing short-term interest rates. Because one-year Treasurys are very liquid, XONE is able to trade with a tight 0.02% 30-day median bid-ask spread. The ETF charges a 0.03% expense ratio.
WisdomTree Floating Rate Treasury Fund (USFR)
Unlike money market funds, ETFs cannot fix their net asset value (NAV) at $1. Because ETFs trade on exchanges, their price reflects market supply and demand, although the in-kind creation and redemption process helps keep trading prices closely aligned with NAV. For ETF investors seeking stability, USFR is a good option. It tracks the Bloomberg U.S. Treasury Floating Rate Bond Index.
USFR holds Treasury floating-rate notes that are priced at a spread above the latest three-month Treasury bill and adjust with each weekly auction. When packaged into an ETF like USFR, investors can expect a relatively steady price chart that accrues interest monthly and dips slightly on ex-dividend dates, creating a “sawtooth” pattern. The fund pays a 4.2% 30-day SEC yield with a 0.15% expense ratio.
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)
ETF liquidity isn’t just about how many shares trade daily. More important is the liquidity of the underlying securities. In the bond market, liquidity is highest among shorter-term, high-quality issues and declines as maturities lengthen and credit risk increases. Treasury bills, which mature in less than 12 months, are the most liquid of all. Unsurprisingly, BIL trades with a minimal 0.01% 30-day median bid-ask spread.
Like USFR, the price of BIL is stable, though not fixed at $1 the way money market funds operate. Investors will notice the same sawtooth pattern of interest accrual followed by a small drop on the ex-dividend date. BIL currently pays a 4.1% 30-day SEC yield, which corresponds to the lower end of the federal funds rate range of 4.25% to 4.5%, minus a 0.1356% expense ratio.
[READ: 5 Great Fixed-Income Funds to Buy for 2025]
F/m US Treasury 10 Year Note ETF (UTEN)
The 10-year U.S. Treasury yield is one of the most closely watched benchmarks in global markets. It influences everything from mortgage rates to corporate borrowing costs and is often seen by traders and economists as a “canary in the coal mine” for economic health. If your goal is to precisely track this tenor, UTEN is the ideal ETF. It is part of a unique class of single-bond ETFs.
Unlike most Treasury ETFs, UTEN holds only the most recently issued “on-the-run” 10-year Treasury note rather than a basket of Treasury securities with varying maturities. This means UTEN’s exposure is more precise, tracking the current 10-year yield directly rather than reflecting an average across maturities. The ETF currently pays a 4.1% 30-day SEC yield and charges a 0.15% expense ratio.
iShares 20+ Year Treasury Bond ETF (TLT)
TLT is one of the largest Treasury ETFs, with more than $48 billion in assets under management and an average daily trading volume of nearly 39 million shares. The fund tracks the long end of the Treasury yield curve through the ICE U.S. Treasury 20+ Year Bond Index. Its performance is highly sensitive to interest rates. However, the ETF’s elevated volatility makes TLT a favorite among bond traders.
In particular, owning 100 shares of TLT allows investors to implement buy-write strategies, where covered calls are sold against the position to generate option premium income. For those who prefer a hands-off, packaged solution, the iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW) automates this process and currently pays an 11.3% distribution yield.
iShares 25+ Year Treasury STRIPS Bond ETF (GOVZ)
A basic rule of thumb with Treasurys and most bond ETFs is that the longer the duration, the more volatile the fund will be in response to changes in interest rates. Bond prices move inversely with rates, so falling yields deliver gains while rising yields cause losses. Taken to the extreme, this dynamic is on display in GOVZ, which tracks the ICE BofA Long U.S. Treasury Principal STRIPS Index.
This benchmark magnifies interest rate sensitivity, which is why GOVZ carries an average duration of 26.6 years. That long duration makes GOVZ nearly as volatile as stocks, with a three-year standard deviation of 24.6%. For investors, GOVZ is best viewed as a tool for inexpensive crash protection with some income potential, given its extreme sensitivity to moves in long-term rates.
More from U.S. News
7 of the Best High-Yield Bond Funds to Buy Now
6 Best Junk Bond Funds to Buy Now
7 Best-Performing ETFs of 2025
7 Best Treasury ETFs to Buy Now originally appeared on usnews.com
Update 09/16/25: This story was published at an earlier date and has been updated with new information.
