SGOV vs VBIL: Treasury ETF Analysis for House Savings Strategy

This analysis examines the comparison between SGOV and VBIL Treasury ETFs as discussed in a Reddit [1] post, where investors are seeking higher-yield alternatives to a 3.6% APY high-yield savings account for house savings. Both ETFs offer attractive yields around 4% in the current interest rate environment, with minimal risk and monthly dividend distributions. The choice between these nearly identical Treasury ETFs primarily depends on minor cost differences and liquidity preferences.

The discussion occurs in a stable but elevated interest rate environment, with the Federal Funds Rate at 4.00% as of October 2025 [3]. Short-term Treasury yields are hovering around 3.80-3.96%, while the 10-year Treasury yield stands at 4.08% [3]. This rate environment makes Treasury ETFs particularly appealing as they offer yields superior to traditional savings accounts while maintaining principal safety.

• Current Price: $100.49 (+0.01%)
• Market Cap: $57.90B
• Trading Volume: 8.71M shares [0]
• Expense Ratio: 0.09% [4]
• AUM: $51.8B (as of July 2025) [1]
• Tracks: ICE 0-3 Month US Treasury Securities Index [4]
• 1-Year Total Return: 4.7% [1]

• Current Price: $75.50 (+0.03%)
• Market Cap: $2.28B
• Trading Volume: 1.75M shares [0]
• Expense Ratio: 0.07% [4]
• AUM: $3B (accumulated in ~6 months since launch) [4]
• Tracks: Bloomberg 0-3M Treasury Bill Index [4]

Vanguard launched VBIL in early 2025, quickly accumulating $3 billion in AUM within 6 months [4]. This competitive entry has benefited investors through fee compression and increased options in the Treasury ETF space. The rapid growth demonstrates strong investor adoption and validates the demand for low-cost Treasury exposure.

Major equity indices showed mixed performance recently, with the S&P 500 down 0.24% to 6,850.92 and NASDAQ declining 0.67% to 23,406.46 on November 12 [0]. This equity market uncertainty has reinforced the appeal of Treasury ETFs as safe havens and cash equivalents, particularly for investors with specific savings goals like house purchases.

1. Yield Advantage
   : Both ETFs offer meaningful yield advantages over the 3.6% HYSA benchmark, with current Treasury yields around 4% [3][4]. This represents approximately 0.4% additional yield without additional risk.

2. Cost Efficiency
   : VBIL’s 0.07% expense ratio provides a slight cost advantage over SGOV’s 0.09% [4]. While the difference appears minimal (0.02%), it compounds over time and reflects Vanguard’s competitive fee structure.

3. Liquidity Premium
   : SGOV’s significantly higher trading volume (8.71M vs 1.75M) [0] suggests better liquidity and tighter bid-ask spreads, which could be important for investors making frequent monthly contributions.

4. Market Adoption Trends
   : VBIL’s rapid AUM growth to $3B in just 6 months [4] indicates strong market acceptance and suggests Vanguard’s reputation for low-cost investing is resonating with investors.

The Federal Reserve’s recent rate cuts to the 3.75%-4.00% range have maintained attractive short-term yields while reducing opportunity costs of holding cash [3]. This environment creates an optimal scenario for Treasury ETFs as house savings vehicles, offering both yield and principal protection.

1. Interest Rate Risk
   : While minimal due to ultra-short duration, further Fed rate cuts could reduce yields over time, narrowing the advantage over HYSAs.

2. Opportunity Cost
   : If rates decline significantly, the yield advantage may diminish, though principal protection remains intact.

3. Liquidity Considerations
   : VBIL’s lower trading volume [0] could result in wider spreads during market stress, though current levels are considered “decent” by market participants [4].

1. Current Rate Environment
   : With the Fed Funds Rate at 4.00% [3], the present environment offers attractive yields for Treasury ETFs relative to historical averages.

2. Fee Competition
   : Vanguard’s entry with VBIL has created competitive pressure that benefits investors through lower fees [4].

3. Tax Efficiency
   : Treasury securities offer state income tax exemptions, providing additional after-tax yield advantages over fully taxable savings accounts.

For investors comparing SGOV vs VBIL for house savings:

• Expense ratio minimization is priority (0.07% vs 0.09%)
• Comfortable with slightly lower liquidity
• Prefer Vanguard’s platform and potential future fee reductions

• Maximum liquidity and trading volume are important
• Prefer established track record with larger AUM
• Value iShares’ extensive ETF ecosystem

Both funds offer:

• U.S. Treasury backing with negligible credit risk
• Monthly dividend distributions suitable for systematic investing
• Ultra-short duration minimizing interest rate sensitivity
• State income tax exemption on interest income

The Reddit discussion [1] mentions maintaining an emergency fund in HYSA while investing monthly into the chosen ETF. This approach balances liquidity needs with yield optimization, appropriate for house savings timelines where capital preservation is paramount.

The analysis indicates both SGOV and VBIL represent suitable Treasury ETF options for house savings, with the choice largely dependent on individual preferences for cost vs. liquidity. Both provide safe, liquid exposure to short-term Treasury securities with yields superior to traditional savings accounts in the current rate environment.