Floating Rate Treasury ETF vs T-Bill ETF: USFR vs SGOV

A floating rate Treasury ETF is out-yielding the T-bill fund most cash parkers own. As the Fed’s October 27–28, 2026 meeting got underway, WisdomTree’s USFR showed a 3.99% 30-day SEC yield versus 3.76% for iShares’ SGOV, despite charging 0.15% against 0.09%. The edge is real but narrow: about $23 a year per $10,000, and it flips if rates fall.

Key takeaways

• USFR’s 30-day SEC yield was 3.99% on October 26, 2026, versus SGOV’s 3.76%.
• SGOV is cheaper to own: a 0.09% expense ratio versus 0.15% for USFR.
• USFR pulled in $1.71 billion over the past month, according to ETF Central.

Why is a floating rate Treasury ETF yielding more than SGOV right now?

Because floating rate notes reset every week to the latest 13-week bill auction, while SGOV holds bills bought over the past few months. With markets pricing more Fed hikes, the newest bill rate sits above the older ones. On October 26, 2026, the 13-week bill auction cleared at 4.050%, above the top of the Fed’s 3.75%–4.00% range.

That auction result comes from Helious’ auction tracker, which logged a 3.07 bid-to-cover ratio. Demand was strong, and the rate was rich.

The news hook is the Fed itself. The FOMC opened its two-day meeting on Tuesday, October 27, with a decision due Wednesday, October 28. Yahoo Finance reports most economists expect a hold, with September CPI running at 3.7%.

The market is looking past Wednesday. TD Securities’ Oscar Muñoz called a December hike “all but locked in,” and Pantheon’s Samuel Tombs said markets expect “roughly three hikes” over the next eight months, per the same report. That expectation is what lifts the newest bill yields.

USFR vs SGOV: how do the two cash ETFs compare?

SGOV is bigger, cheaper and slightly more liquid. USFR yields more today and adjusts faster to rate changes. Both hold only U.S. Treasury debt, so credit risk is the same. The choice comes down to fee versus reset speed, and the table shows how small both gaps are.

Metric	USFR (WisdomTree)	SGOV (iShares)	TFLO (iShares)
What it holds	Treasury floating rate notes	Treasury bills, 0–3 months	Treasury floating rate notes
Expense ratio	0.15%	0.09%	0.15%
30-day SEC yield	3.99% (Oct 26, 2026)	3.76% (Oct 23, 2026)	n/a
Distribution / 12-month yield	3.76% distribution (Oct 26)	3.64% trailing 12-month (Oct 23)	n/a
Net assets	~$21.4 billion (Oct 26)	$116.9 billion (Oct 26)	$7.24 billion (Oct 26)
Effective duration	0.02 years	0.12 years	n/a
Median bid/ask spread (30-day)	0.02%	0.01%	n/a
Inception	Feb 4, 2014	May 26, 2020	n/a

One caveat on the table: the two SEC yields are dated three days apart, because each issuer publishes on its own schedule. A 30-day SEC yield is also a backward-looking standardized figure, not a promise of what you will earn next month.

How do Treasury floating rate notes actually work?

A Treasury FRN is a two-year note whose interest rate equals the latest 13-week bill auction rate plus a fixed spread. The rate resets weekly, interest accrues daily, and coupons are paid quarterly. Because the coupon chases the market, the price barely moves when rates change.

The mechanics, per the Treasury’s FRN page:

• Index rate: the highest accepted discount rate at the most recent 13-week bill auction, held weekly.
• Spread: set at the note’s first auction as the high discount margin, then fixed for its life.
• Term and payments: two years, with interest paid every three months.
• Reset timing: iShares’ TFLO product brief says the new rate takes effect the business day after the Monday auction.

That is why USFR lists an effective duration of just 0.02 years. SGOV’s 0.12-year weighted average maturity means its typical bill matures in about six weeks. Both are cash-like. USFR is simply more cash-like on the reset side.

The FRN market is also small. iShares’ brief puts outstanding FRNs at $706 billion against $6,691 billion in bills. USFR held just four notes as of its March 31, 2026 fact sheet, so a fund like it is effectively a basket of the few FRNs outstanding.

How much does the yield gap and fee gap cost you in dollars?

At today’s SEC yields, USFR earns about $23 more per $10,000 a year than SGOV, even after its higher fee. The fee gap alone is $6 per $10,000. Both numbers are small next to the yield swings a single Fed move can cause.

Worked example: $10,000 and $100,000

The SEC yield is already net of fund expenses, so the yield math below includes the fee. The fee lines show what each fund keeps.

• USFR fee: $10,000 × 0.15% = $15 a year. On $100,000, $150.
• SGOV fee: $10,000 × 0.09% = $9 a year. On $100,000, $90.
• USFR income at 3.99%: $10,000 × 3.99% = $399. On $100,000, $3,990.
• SGOV income at 3.76%: $10,000 × 3.76% = $376. On $100,000, $3,760.
• Net gap: $23 per $10,000, or $230 per $100,000, if both yields held for a year. They will not.

What the reset lag is worth in a rate move

This is mechanics, not a forecast. Suppose bill rates rose 0.25 point. On $100,000, that is $250 a year of extra income. USFR would capture it within about a week. SGOV would phase it in as bills roll over its roughly 0.12-year maturity.

The lag cost is roughly $250 × 0.12 ÷ 2 = $15 on $100,000, a one-time drag while SGOV’s portfolio catches up. The same math runs in reverse if rates fall: SGOV keeps the older, higher yields a little longer and USFR drops first.

Is a floating rate Treasury ETF worth it in 2026?

On measured yield today, yes: USFR clears SGOV by 0.23 point after fees. But the “hike hedge” pitch is oversold. SGOV also reprices within weeks. What you are really buying with USFR is a small spread over bills and a faster reset, at a 0.06-point higher fee.

Here is the skeptical read. USFR’s 3.76% distribution yield matches SGOV’s SEC yield exactly. In other words, the payouts investors have actually received lately are not far apart. The advantage lives mostly in the newest resets, which reflect hikes the market expects but the Fed has not delivered.

The flows show investors chasing that story. ETF Central data show USFR took in $1.71 billion in the past month and $4.94 billion year to date, as of October 26. TFLO, its iShares twin at the same 0.15% fee, gathered $329 million in the month.

Late money into a rate-hike trade tends to arrive when the hikes are already priced. If the Fed holds on Wednesday and sounds less hawkish than expected, the 13-week rate could slip and the yield gap could narrow quickly. USFR’s price would hardly move, but its income would.

For context on longer bonds, the 10-year Treasury traded near 4.986% and the 2-year near 4.731% late on October 27, according to TheStreet. We weighed that duration trade-off in TLT vs SGOV.

Which cash ETF fits which investor?

If you think rates keep climbing and hold cash for months, the floating rate fund’s faster reset pays a little more. If you trade in and out often or want the lowest fee, SGOV wins. Neither replaces an emergency fund at an FDIC-insured bank.

Investor profile	Better fit on measurable terms	Why
Parking cash for 6+ months while hikes are priced in	USFR or TFLO	Weekly reset captures new bill rates within days
Lowest cost, frequent trading	SGOV	0.09% fee, $116.9B in assets, 0.01% median spread
Expects the Fed to stop hiking soon	SGOV	Older, higher-yield bills roll off more slowly
Wants maximum reset speed in an ETF	USFR	0.02-year effective duration
Comparing against a money market fund	See our earlier test	Different fees, settlement and tax treatment

We ran the money market comparison in T-Bill ETF vs Money Market Fund. For how a hike hits longer bond funds, see Fed Rate Hike Bond ETFs.

Taxes: same family, same treatment

Both funds hold only Treasury debt, and interest from Treasury securities is generally exempt from state and local income tax. That makes both look better than a bank account for investors in high-tax states. Check each fund’s annual tax letter for the exact share that qualifies.

What to watch next

Three dated events can change this comparison quickly. Each one moves the 13-week bill rate, which drives USFR’s income directly and SGOV’s with a lag.

1. October 28, 2026: the FOMC decision, with Chair Kevin Warsh’s press conference at 2:30 p.m. ET. A hawkish tone supports the floating rate edge.
2. Every Monday: the 13-week bill auction. Each result resets USFR’s index rate the next business day.
3. December 8–9, 2026: the next FOMC meeting, with a Summary of Economic Projections, per the Fed’s calendar. This is the meeting analysts tie to the next hike.

FAQ

What is a floating rate Treasury ETF?

It is a fund that holds two-year U.S. Treasury floating rate notes, whose interest resets weekly to the 13-week bill auction rate plus a fixed spread. USFR and TFLO are the two largest.

Is USFR riskier than SGOV?

Both hold only U.S. Treasury debt, so credit risk is the same. USFR’s effective duration is 0.02 years versus SGOV’s 0.12 years, so neither has meaningful interest rate risk.

Which is cheaper, USFR or SGOV?

SGOV. Its expense ratio is 0.09%, or $9 a year per $10,000, versus 0.15%, or $15, for USFR.

Why does USFR yield more if it charges more?

Its notes reset to the newest 13-week bill rate, 4.050% at the October 26, 2026 auction, plus a spread. SGOV still holds some bills bought at lower rates.

What happens to USFR if the Fed cuts rates?

Its income falls within about a week as the notes reset lower. SGOV’s yield would fall too, but more gradually as its bills mature over several weeks.

Can I buy Treasury FRNs directly?

Yes. The Treasury sells FRNs in $100 increments with a $100 minimum, and you can hold them to maturity or sell before. An ETF adds a fee but trades intraday.

The bottom line

On today’s numbers, the floating rate Treasury ETF wins the yield contest: USFR’s 3.99% beats SGOV’s 3.76% after fees, worth about $230 a year on $100,000. SGOV wins on cost, size and spread. The deciding variable is the path of the 13-week bill rate.

If bill rates keep rising into the December 8–9 meeting, the floating rate fund’s edge persists. If the Fed signals a pause, that edge shrinks within weeks and SGOV’s lower fee takes over. Either way, the stakes are tens of dollars per $10,000, not hundreds. Do not pay a spread or a tax bill to switch for it.

This article is journalism, not investment advice. Do your own research before investing.

Sources

• WisdomTree: USFR fund page (data as of October 26, 2026) and USFR fact sheet (March 31, 2026)
• iShares: SGOV fund page (data as of October 23–26, 2026)
• iShares: Mechanics of TFLO product brief
• U.S. Treasury: Floating Rate Notes
• Helious: 13-week bill auction results, October 26, 2026
• ETF Central: USFR vs TFLO assets and flows (as of October 26, 2026)
• Yahoo Finance: The Fed’s October meeting starts today (October 27, 2026)
• TheStreet: Stock Market Today, October 27, 2026
• Federal Reserve: FOMC meeting calendar

Wealth Engine researches and drafts with AI tools and checks every figure against the sources above. How we report.