VGSH ETF

VGSH and SCHO are two ETFs with almost identical attributes. The one big difference is SCHO pays a higher yield. VGSH actually has a slightly better total return, but as an income ETF, the yield is disappointing.

Vanguard Short-Term Treasury Index Fund ETF Shares is a popular option for investors looking for a safe way to earn interest on their capital. Short-term Treasuries offer relative safety, liquidity, predictable income, tax advantages, and diversification benefits. VGSH stands out for its low-risk profile, low cost, and potential to outperform competitors during periods of rising interest rates.

Vanguard Short-Term Treasury ETF holds Treasury Bonds maturing in 1-3 years. The duration risk is low and the yield is on the rise. We review the fund in light of the multiple rate cuts expected over the next twelve months.

The Vanguard Short-Term Treasury ETF is not a good short or long-term investment due to its modest portfolio duration and sub-1% long-term average annual return, respectively. Despite the Federal Reserve pausing interest rate hikes, VGSH is unlikely to outperform floating rate yield vehicles like TBIL and USFR until the yield curve normalizes. I continue to recommend TBIL or USFR for cash allocation instead of the VGSH.