When interest rates are high, cash finally earns something, and SGOV is one of the easiest ways to collect it. It’s the iShares 0-3 Month Treasury Bond ETF, and it holds nothing but US Treasury bills that mature within three months.

What SGOV is

An ETF that owns very short-term US government debt. Because the bills mature so quickly, the fund behaves a lot like cash: the price barely moves, and the return comes almost entirely from the interest.

Why it’s worth a look when rates are high

The yield. SGOV’s yield tracks short-term Treasury rates. At the peak of the rate cycle, its 30-day SEC yield was above 5%, better than most savings accounts.

Almost no rate risk. Its duration is about 0.09 years, so even if rates move sharply, the price hardly changes. Longer bond funds can drop a lot when rates rise. SGOV doesn’t.

Safety. Treasury bills are about as close to risk-free as investing gets.

Liquidity. With over $27 billion in assets, it trades easily, so getting in and out is simple.

How people use it

  1. As a cash account. An alternative to a savings account or money market fund.
  2. As ballast. A slice of SGOV lowers the volatility of a portfolio without giving up all yield.
  3. As a parking spot. Somewhere to keep money between investments while you wait for the next opportunity.

What to keep in mind

  1. The yield moves with rates. When the Fed cuts, SGOV’s payout falls soon after.
  2. Taxes. The interest is exempt from state and local tax, but you still owe federal income tax.
  3. Opportunity cost. In a strong stock market, SGOV will trail stocks by a lot. It’s a place for cash, not a replacement for growth.

SGOV won’t make anyone rich, and that’s the point. It’s a simple, low-risk way to make idle cash earn the going rate while you decide what to do with it.