Treasury Yields Are Soaring. Don't Miss Out and Buy This ETF Today

SGOV is an ETF designed to hold U.S. Treasury bills with maturities of 90 days or less, tracking the ICE 0-3 Month US Treasury Securities Index. The fund’s bills continuously mature and roll, so the effective yield resets toward recent Federal Reserve actions. The structure creates minimal credit risk and very limited duration risk, resulting in stable price behavior. Price performance has been nearly flat, while returns primarily come from monthly distributions. Trailing twelve-month distributions total about $4.02 per share, implying an approximate 3.9% yield at current prices. Distributions are exempt from state and local income tax, which can improve after-tax returns for investors in high-tax states.

"Investors have pushed roughly $75 billion into SGOV because it solves a specific problem. You want a cash sleeve that actually earns something, you do not want babysit a CD ladder, and you do not want duration risk eating your principal when the long end sells off. SGOV pays you for parking money in T-bills with maturities of 90 days or less, and it does it for an expense ratio of 0.09%."

"SGOV holds a basket of U.S. Treasury bills tracking the ICE 0-3 Month US Treasury Securities Index, and because those bills constantly mature and roll, the fund's effective yield resets toward whatever the Fed has done lately. There is no credit risk in any meaningful sense. There is almost no duration risk either, which is why the price chart looks like a heartbeat monitor on a healthy patient."

"Year to date the ETF is up 0.14% in price, and over five years the price return is 0.53%. That is the point. Everything else comes through the monthly distribution. Shares trade around $100, and they have barely moved over the last five months, staying within roughly 35 cents of that level. Volatility, as a stock-market concept, does not really apply here."

"Trailing twelve-month distributions sum to roughly $4.02 per share, which translates to a yield of roughly 3.9% at current prices. That is real money on cash. It also beats almost any retail savings account, and the distributions are exempt from state and local income tax, which matters a great deal if you live somewhere like California or New York."

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