SGOV is a basket of US Treasury bills maturing within three months, wrapped in an ETF. It pays whatever short-term government rates pay, about 3.7% lately, in monthly distributions, and its price barely moves from $100. This is not an investment so much as a parking spot: the closest thing to holding cash inside a brokerage account.
Scale is 0–50%/yr. The verdict is the point: cash clears neither hurdle. It is the waiting room, not a contestant.
SGOV holds Treasury bills that mature in under three months and constantly rolls them into new ones. Because nothing in the basket lives long enough to move much, the share price hugs $100: its 52-week range is about forty cents wide. With over $110 billion in assets, it is the biggest cash-parking ETF in the country.
The fund passes through the interest on its T-bills as monthly distributions. Lately that has run about 3.7% a year. The number follows the Federal Reserve: it paid over 5% in 2023 and 2024, and essentially zero in 2021. Whatever short-term rates do, SGOV does a few weeks later.
Two edges. The interest is exempt from state income tax, and the money is liquid during market hours with no bank involved. The tradeoff: it is a market security, not a bank deposit. No FDIC insurance. In practice the price barely twitches, but the guarantee structure is different, and it is worth knowing the difference.
Cash has one job: be there. Between ideas, after a sale, while waiting for a price you like, money needs a place to wait that does not bounce around. SGOV is that place. It will not make you rich. It is the reason you can afford to wait until something can.
The fee is 0.09%, nine cents a year per hundred dollars. The real cost is inflation: at a 3.7% nominal yield, the purchasing-power gain is roughly zero. Cash does not lose money the way stocks do. It loses it the way ice melts: slowly, quietly, while you are looking elsewhere.
A 3.7% yield against 2 to 3% inflation leaves little or nothing in real terms. Over long stretches, cash is a guaranteed slow loss of purchasing power. That is the trade for safety, and it should be stated out loud.
There is no lock-in. If the Fed cuts rates, the monthly payout shrinks within weeks. Anyone budgeting around today's 3.7% should know it is a weather report, not a contract.
A bank deposit carries government insurance up to the limit. SGOV carries market pricing. The T-bills inside are government-backed and the price has never strayed far from $100, but the wrapper is not a deposit account.
When stocks rip, cash is the worst place to be. The risk of SGOV is not losing money. It is watching everything else compound while you earn 3.7%. Opportunity cost is real cost.
Treasury interest skips state tax, which helps. But federally the distributions are ordinary income, taxed as earned. In a taxable account, that 3.7% shrinks after the IRS takes its cut.