SGOV vs BIL vs SHV: Which T‑Bill ETF for a Retirement Cash Reserve?

If you want the lowest fee and the shortest bills, SGOV fits; if you want the longest track record with the same 1‑to‑3‑month bills, BIL fits; if you accept slightly more price movement for bills out to one year, SHV fits. The differences are small: a few hundredths of a percent in fees and a few months in maturity. Picking any of the three matters far less than sizing the reserve and refilling it on a plan.

Scope. This page covers cash a retiree expects to spend within about two years, the “cash bucket” of a bucket strategy. It excludes long‑term bonds, inflation‑protected bonds (see TIPS) and money you may need the same day, which usually belongs in a bank. For the wider fund menu, see the retirement ETF hub.

Sources: issuer fund pages and fact sheets (expense ratio, SEC yield, duration, index; BIL’s latest SEC yield is a month-end figure, so it is not same-day comparable), Exent market data (distribution yield, to Sep 30, 2026), iShares 2025 tax information. Three yields mean three different things. The 30‑day SEC yield annualizes the last 30 days of net income after fees, so it is the best guide to what the fund earns now. The distribution yield divides the past 12 months of payouts by today’s price, so it lags rate changes. The total return adds price change to distributions, and that is what you actually earned.

Same dates for all three: calendar years from daily closes with distributions reinvested (Exent market data). Issuer NAV returns for 2026 to Sep 30 round to the same figures (2.71%, 2.66%, 2.57%). SHV lagged in 2022 because its longer bills lost a little value as rates jumped; it earns that back when longer bills pay more. Fund pages: SGOV, BIL, SHV.

Mostly, in most states. The IRS states that interest on Treasury bills, notes and bonds is subject to federal income tax but exempt from all state and local income taxes. A fund passes that through only for the share of its income that came from US government obligations. iShares reported 95.14% for SGOV and 89.80% for SHV for tax year 2025, and marked both as holding at least 50% of assets in federal obligations at every quarter end. That matters because some states only allow the exclusion when a fund passes such an asset test. Your broker’s 1099 usually shows the full amount as ordinary dividends, so the subtraction on the state return is yours to make.

• Federal tax: distributions are ordinary income in a taxable account, at your normal bracket.
• Money market funds: the label “government” does not mean 100% Treasury income. iShares’ own government money market ETF reported only 56.43% for 2025, because repurchase agreements and agency debt count differently.
• Inside an IRA or 401(k), none of this matters: compare yields and fees only. See tax‑efficient portfolios for asset location.

The FDIC covers bank deposits; it does not cover mutual funds or Treasury bills. A savings account wins on access and simplicity. A T‑bill ETF can win after tax in a state with an income tax, and it sits in the same brokerage account as the rest of the portfolio, which makes refilling the bucket a single trade. More on parking large sums: where to keep a large amount of cash.

It falls with them, within weeks. That is reinvestment risk: bills mature every few weeks and are replaced at the new rate. BIL’s own history shows how far it can go. Exent calculation, illustrative replay from Exent market data distributions: $100,000 in BIL at a constant $91.50 share price (BIL closed between $91.22 and $91.86 from 2019 to 2025):

Arithmetic: 100,000 ÷ 91.50 = 1,092.9 shares; 1,092.9 × $4.5009 = $4,919. The principal stayed put, but the income swung from zero to almost $5,000. If you want to lock a rate for years three to ten of spending, a Treasury ladder or a short bond fund does that, at the cost of price swings: Vanguard’s 1‑to‑3‑year Treasury ETF (VGSH) had a 5.5% worst drawdown in the five years to Sep 30, 2026 (Exent market data). See bond ladder vs bond fund and, for the core bond fund behind the reserve, BND vs AGG.

Usually one to two years of the spending gap, not of total spending. The gap is what the portfolio must pay after Social Security, pensions and annuities. Holding more cash adds safety but costs growth: over the 10 years to Sep 30, 2026, BIL returned 2.29% a year against 15.18% for the S&P 500 fund SPY (issuer NAV, State Street). The bucket strategy guide covers sizing by past recovery times, and how much cash to hold covers emergency funds; the retirement income ETF guide shows where the reserve sits in a full income plan. Refill the bucket from whatever is above target when you rebalance, not on a market forecast.

Hypothetical illustration, not advice for everyone your age. A retired couple spends $90,000 a year. Their Social Security is $40,260 a year, the 2027 average for an aged couple ($3,355 a month × 12, SSA). The gap is about $50,000, so two years is a $100,000 reserve in a taxable account. Assumptions: 24% federal bracket, 5% flat state tax, 2025 government‑income percentages applied to a year of income at the latest SEC yields (SGOV and SHV Oct 22, 2026; BIL Sep 30, 2026), and a savings account at an illustrative 3.90%.

Arithmetic for SGOV: $100,000 × 3.76% = $3,760; $3,760 × 24% = $902.40; $3,760 × (100% − 95.14%) × 5% = $9.14; $3,760 − $902.40 − $9.14 = $2,848.46. The savings account needs about 4.01% to match SGOV after tax (2.848% ÷ (1 − 0.24 − 0.05)). In an IRA, the order is simply the SEC yields. SHV comes out ahead here only because longer bills paid more on that date; when that reverses, so does the ranking. BIL trails partly because its SEC yield is from an earlier date (Sep 30). The simplification ignores the deduction of state tax on the federal return.

Expense ratios and duration from the issuers. Yields are trailing 12‑month distributions divided by the Sep 30, 2026 price (Exent market data).

SEC yields change every day and are as of Oct 22, 2026 (BIL: Sep 30, 2026). Government‑income percentages change every year; the 2026 figures arrive in early 2027. State rules differ, so this is not tax advice: check your state’s instructions or a tax professional. Returns are past results and do not predict future rates. BIL’s 2025 state‑exempt share was not available in a verifiable form for this page.