The iShares 0-3 Month Treasury Bond ETF (SGOV) closed Friday at $100.52, a penny above its net asset value. Yet its official 30-day SEC yield stood at 3.63%, while the three-month Treasury bill rate was 4.07%. That 44-basis-point gap might look like lost income, but it's largely a matter of comparing apples to oranges—not a sign that SGOV is leaving money on the table.
For cash investors, the more relevant question is how quickly SGOV's income will adjust after the Federal Reserve's September 15-16 meeting. BlackRock reported an average yield to maturity of 3.79% and a weighted average maturity of 0.12 years as of September 10. The former is a closer snapshot of the portfolio's current earning power; the latter implies that much of the portfolio rolls over in roughly 44 days.
Why SGOV's yield and the T-bill rate disagree
BlackRock's SGOV fund page defines the SEC yield as interest earned after fund expenses during the preceding 30 days. It's standardized and backward-looking. By contrast, the Treasury's September 11 yield curve is a point-in-time set of rates: 3.93% at one month and 4.07% at three months.
SGOV owns bills across the zero-to-three-month range, not only the highest-yielding three-month point. Its 3.79% portfolio yield to maturity also excludes fees, while the fund charges a 0.09% annual expense ratio. Those timing, maturity-mix and fee differences explain why the headline rates should not match exactly.
If a 44-basis-point difference persisted for a full year, it would equal $440 on $100,000 before compounding. But that's an illustration, not a forecast: the SEC yield will absorb newer bill rates as holdings mature, and the Treasury curve can change before the next reinvestment.
The Fed will reach SGOV with a lag
The Fed held its target range at 3.5% to 3.75% on July 29, although three voters preferred a quarter-point increase. Its official calendar puts the next decision on September 16.
A quarter-point move would amount to $250 a year on $100,000 once fully reflected, all else equal. SGOV would not deliver that change overnight. Existing bills keep their locked yields until sale or maturity; replacement securities then pull the portfolio yield toward the new short-rate environment. Because SGOV's duration is only 0.11 years, its price sensitivity is small, but its income is deliberately quick to reprice.
The direct-bill counterargument
Investors who know exactly when they need the cash can buy an individual Treasury bill, lock its yield to maturity and avoid SGOV's ongoing fee. That's the strongest case against the ETF. It also removes the temptation to mistake SGOV's monthly price-and-distribution cycle for capital appreciation: the share price generally accrues income between distributions and then adjusts when that cash leaves the fund.
SGOV's answer is convenience. It trades during the session, distributes monthly and had $109.4 billion of net assets on September 11. BlackRock reported a one-basis-point 30-day median bid-ask spread as of September 10, while Friday's closing premium to NAV was also about one basis point. That makes it a highly liquid cash sleeve, though not a bank deposit and not immune to small trading premiums or discounts.
The number to watch after Wednesday is not whether SGOV stays near $100.52. It's the fund's average yield to maturity as the portfolio rolls. A Fed increase would lift that earning rate over subsequent weeks; a cut would reduce it just as quickly. Investors choosing between SGOV and a direct bill are therefore choosing flexibility versus a locked maturity—not choosing between two identical 3.63% and 4.07% offers.
