Cash ETFs: The New "New Thing" in the Search for Yield and Safety?

John Robinson |
Categories
Cash Management
Mutual Funds

By John H. Robinson, Financial Planner (September 2025)

In recent years, cash and ultra-short term bond  ETFs have surged in popularity, offering investors new avenues to target yield and safety, often outpacing traditional money market funds. Major ETF issuers—Vanguard, BlackRock (iShares), and State Street (SPDR)—now offer a spectrum of offerings in this space and have been  drawing both retail and institutional assets. This shift comes as investors demand liquidity, transparency, and competitive yields, while seeking to avoid the low-nonexistent yields in bank deposits and brokerage sweep funds.

Cash ETFs vs. Money Market Funds: Yields and Expenses

Cash-like ETFs and traditional open-end money market funds seem similar, but subtle differences in structure, yield, and fees can affect investor outcomes.  Below are three of the popular money market funds at  the “Big 3” asset custodians.  Beneath them are two compelling low-expense T-bill ETFs.

  • At Charles Schwab, the Prime Advantage Money Fund (SWVXX) currently yields 4.04%, while the higher-tier, lower-expense  Ultra Shares (SNAXX) for large balances offers 4.19%.[1]

  • Vanguard’s Federal Money Market Fund (VMFXX) current 30-day SEC yield -  4.20%.[2][3]

  • Fidelity’s Government Money Market Fund (SPAXX) current 30-day SEC yield - 3.92%.[2]

  • Vanguard’s 0-3 Month Treasury Bill ETF (VBIL) boasts a 30-day SEC yield - 4.18%, with an expense ratio of just 0.07%.[4][5][6]

  • iShares 0-3 Month Treasury Bond ETF (SGOV) offers a yield around 4.35% and expense ratio of 0.09%.[7][8][9]

Money market funds, especially outside of Vanguard, often come with higher expense ratios—sometimes above 0.40%— owing to the fact that they serve as profit centers for Schwab and Fidelity.  In contrast, cash ETFs like VBIL and SGOV frequently keep expenses under 0.10%, enabling them to pass more yield back to investors.[10]

Other Popular  Short-Term Cash-Like ETFs

Key players in this space include:

  • SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): Popular for liquidity and stability, frequently tapped for cash management, with a yield usually near peers. Expense ratio = 0.13%.  30-Day SEC Yield = 4.13%.  See Fact Sheet and Prospectus

  • Schwab Short-Term U.S. Treasury ETF (SCHO): Covers 1-3 year Treasuries, often used as the next step in the safe fixed income ladder. Expense Ration = 0.03%,  30-Day SEC Yield = 3.62%.  See Fact Sheet and Prospectus.

The Verdict

As yields on money market funds at Charles Schwab and Fidelity have dipped below 4% (due to the combination of falling rates and their unseemly high expense ratios, I believe the 0-3 Month T-bil Cash ETFs merit consideration as cash alternatives for Financial Planning Hawaii clients.

 

NOTE:   This artcicle is intended to edcucate readers about a speciallized class of ETFs.  It is NOT intended to recommend andy particular security or asset type.  The mention of specific securities in this article is in the context of raising awareness of this type  of security.  No opinion or guidance to purrchase or sell has been rendered.

 

John H. Robinson is the owner/founder of Financial Planning Hawaii and Fee-Only Planning Hawaii. He is also a co-founder of fintech software maker Nest Egg Guru.

 

RELATED READING

  1. https://www.schwab.com/money-market-funds 

  2. https://www.investopedia.com/vanguard-fidelity-or-schwab-which-one-pays-the-most-on-your-cash-right-now-11743580   

  3. https://www.bankrate.com/investing/best-money-market-funds/   

  4. https://advisors.vanguard.com/investments/products/vbil/vanguard-0-3-month-treasury-bill-etf   

  5. https://investor.vanguard.com/investment-products/etfs/profile/vbil   

  6. https://www.perplexity.ai/finance/VBIL 

  7. https://public.com/stocks/sgov   

  8. https://www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf   

  9. https://www.morningstar.com/etfs/arcx/sgov/quote 

  10. https://www.etftrends.com/managing-cash-money-market-funds-etfs/     

  11. https://money.usnews.com/investing/articles/best-money-market-funds-to-buy 

  12. https://www.reddit.com/r/Bogleheads/comments/1gl4k31/fidelity_schwab_or_vanguard_which_money_market/ 

  13. https://www.youtube.com/watch?v=TrdJKech_Rw 

  14. https://www.cnbc.com/quotes/VBIL 

  15. https://danelfin.com/etf/SGOV 

  16. https://www.bogleheads.org/forum/viewtopic.php?t=456255 

  17. https://www.forbes.com/sites/baldwin/2025/03/16/how-to-boost-your-cash-yield-at-fidelity-vanguard-chase-and-schwab/ 

  18. https://advisors.vanguard.com/investments/etfs?asset_class=Equity 

  19. https://finance.yahoo.com/quote/SGOV/performance/ 

https://www.youtube.com/watch?v=d3kiV570MhI