New ultra-short Treasuries ETFs add liquidity options

Today, Vanguard continued its mission to provide superior investment solutions by launching two new index ETFs: Vanguard Ultra-Short Treasury ETF (VGUS) and Vanguard 0-3 Month Treasury Bill ETF (VBIL).

The addition of two ultra-short, low-cost Treasury ETFs to Vanguard’s Treasury lineup will potentially help advisors manage clients’ short-term liquidity needs, filling a gap between money market funds and existing short-term bond funds that have historically been used to manage liquidity.

VGUS and VBIL are both index strategies managed by Vanguard Fixed Income Group that come with a 0.07% estimated annual expense ratio. Each is currently the low-cost leader in its respective category.¹

Short duration is a critical feature for managing short-term liquidity. The relatively short durations of these two ETFs mean they are less sensitive to interest rate fluctuations than longer-dated holdings that, along with their low expense ratios, can help enhance performance in volatile market environments.

VBIL focuses on Treasury bills maturing in three months or less, while VGUS holds Treasuries with maturities less than 12 months. These short-maturity ETFs can provide a stable foundation for clients who need to maintain liquidity without exposing themselves to excessive risk.

Part of a comprehensive liquidity tool kit

VGUS and VBIL can serve as valuable components of an investor’s liquidity tool kit. They fill the gap between money market funds and existing ultra-short-term bond offerings, providing a range of options for different liquidity needs. For clients who require immediate liquidity, VBIL’s focus on very short-term Treasury bills may be appropriate. For those with a slightly longer time horizon, VGUS offers a broader range of Treasuries with maturities up to 12 months.

Professional management

The new ETFs will be advised by Vanguard Fixed Income Group, which for more than 40 years has distinguished itself with deep investment capabilities, disciplined index tracking processes, and rigorous risk management techniques.

Vanguard Fixed Income Group has been managing index funds since 1986, when it launched Vanguard Total Bond Market Index Fund, the world’s first bond index fund. Its world-class fixed income indexing talent is supported by sophisticated technology and investment processes that enable tight tracking for Vanguard’s index funds and ETFs.

Low trading costs

Another important feature of VGUS and VBIL is their expected tight bid-ask spreads. This means that there’s a small gap between the price to buy shares and the price to sell shares of these ETFs. Tight bid-ask spreads are particularly important for financial advisors who need to execute large volumes of trading quickly and efficiently, ensuring that the total cost of ownership to clients does not include significant transaction costs.

Their low expense ratios make the two ETFs an attractive option for investors who are looking to minimize costs while still potentially earning a return on their short-term investments in a market where every basis point can make a difference.

With Vanguard ETFs, an average trading spread of 1.8 basis points (bps) combined with an average expense ratio of 5.2 bps across Vanguard’s ETF lineup results in an industry-leading total cost of ownership (TCO) of 6.9 bps. TCO is calculated as the ETF’s expense ratio plus its spread. The calculation of each firm’s TCO is the volume-weighted spread for all ETFs in their lineup plus the asset-weighted expense ratio for all the ETFs.² 

For more information about Vanguard funds and Vanguard ETFs, visit advisors.vanguard.com or call 800-997-2798 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including the possible loss of the money you invest.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.

U.S. government backing of Treasury or agency securities applies only to the underlying securities and does not prevent share-price fluctuations. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest.

1 Morningstar, Inc., as February 11, 2025.

2 Source: Vanguard, based on data from Bloomberg, analyzing Vanguard’s lineup of ETFs, as of September 30, 2024.