Average Daily Volume
3.69M
Fund Overview
The Vanguard Short-Term Treasury ETF (VGSH) is an exchange-traded fund that seeks to track the performance of the Bloomberg U.S. Treasury 1–3 Year Index. This index measures the investment return of U.S. Treasury securities with maturities between one and three years. VGSH provides investors with exposure to short-term U.S. government debt, offering a low-risk investment option with relatively stable returns. The fund is known for its low expense ratio and high liquidity, making it a popular choice for conservative investors seeking capital preservation and income. VGSH is ideal for those looking to reduce portfolio volatility or park cash in a secure, short-term instrument.
- Asset Class
-
Bond
- Industry
-
Treasury Bonds
- Annual Dividend Rate
-
- Smart Beta
-
No
- Leveraged / Inverse
-
N/A / No
- Dividend Quality - Yield
-
- 4.04 %
- Currency Hedged
-
No
- Portfolio Turnover
-
89 %
- Dividend Date
-
Why Invest in the VGSH ETF?
Potential Benefits
- Low credit risk due to exposure to U.S. Treasury securities, which are backed by the full faith and credit of the U.S. government.
- Lower interest rate sensitivity compared to longer-duration bonds, reducing volatility in rising rate environments.
- Highly liquid, with tight bid-ask spreads and ample trading volume.
- Low expense ratio (0.04% as of 2025), making it cost-effective for investors.
- Provides a stable income stream through regular interest payments.
- Suitable for capital preservation and short-term cash management.
Potential Risks
- Susceptible to interest rate risk; rising rates can lead to lower bond prices.
- Lower yield compared to longer-term bonds or corporate debt, potentially lagging inflation.
- Limited capital appreciation potential due to short duration.
- Reinvestment risk, as maturing bonds may be reinvested at lower yields in a declining rate environment.
- While credit risk is minimal, geopolitical or fiscal policy changes could impact U.S. Treasury securities.
RSI data unavailable or insufficient history.
Monthly Returns (%)
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 2026 |
+0.2%
|
+0.6%
|
-0.5%
|
+0.2%
|
+0.1%
|
+0.1%
|
+0.1%
|
+0.2%
|
-0.6%
|
+0.2%
|
-
|
-
|
| 2025 |
+0.4%
|
+0.7%
|
+0.4%
|
+0.8%
|
-0.2%
|
+0.6%
|
-0.1%
|
+0.9%
|
+0.3%
|
+0.3%
|
+0.5%
|
+0.3%
|
| 2024 |
+0.4%
|
-0.5%
|
+0.3%
|
-0.4%
|
+0.7%
|
+0.6%
|
+1.2%
|
+0.9%
|
+0.8%
|
-0.6%
|
+0.3%
|
+0.2%
|
| 2023 |
+0.7%
|
-0.7%
|
+1.7%
|
+0.2%
|
-0.4%
|
-0.5%
|
+0.3%
|
+0.5%
|
-0.1%
|
+0.3%
|
+1.1%
|
+1.2%
|
| 2022 |
-0.7%
|
-0.4%
|
-1.4%
|
-0.5%
|
+0.6%
|
-0.6%
|
+0.4%
|
-0.8%
|
-1.2%
|
-0.1%
|
+0.7%
|
+0.2%
|
| 2021 |
0.0%
|
0.0%
|
-0.1%
|
+0.1%
|
+0.1%
|
-0.2%
|
+0.2%
|
0.0%
|
-0.1%
|
-0.3%
|
-0.1%
|
-0.2%
|
| 2020 |
+0.6%
|
+0.9%
|
+1.3%
|
0.0%
|
+0.1%
|
0.0%
|
+0.1%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
| 2019 |
+0.2%
|
+0.1%
|
+0.6%
|
+0.2%
|
+0.8%
|
+0.5%
|
-0.1%
|
+0.8%
|
-0.2%
|
+0.4%
|
0.0%
|
+0.2%
|
| 2018 |
-0.3%
|
0.0%
|
+0.2%
|
-0.2%
|
+0.4%
|
0.0%
|
0.0%
|
+0.4%
|
-0.2%
|
+0.1%
|
+0.4%
|
+0.8%
|
| 2017 |
-0.2%
|
+0.1%
|
+0.1%
|
+0.2%
|
+0.1%
|
-0.1%
|
+0.2%
|
+0.2%
|
-0.2%
|
-0.1%
|
-0.2%
|
0.0%
|
< -5%
-5% to -2%
-2% to 0%
0%
0% to +2%
+2% to +5%
> +5%
Top Holdings (by weight)
| Symbol |
Company Name |
Weight |
No holdings data available.
Related ETFs: VGSH vs Peers
Comparison highlights key differences on cost, coverage, and focus within sector ETFs.
Investment Strategy
VGSH aims to track the performance of the Bloomberg U.S. Treasury 1–3 Year Index, which includes U.S. Treasury securities with remaining maturities between one and three years. The fund uses a passive management strategy, meaning it seeks to replicate the index rather than actively selecting securities. The index is market-cap weighted, so larger issuances of Treasury securities have a greater impact on the fund's performance. VGSH primarily holds physical Treasury notes and bills, avoiding derivatives or leverage. The fund is rebalanced monthly to align with the index composition, ensuring consistent exposure to the short-term Treasury market.
Frequently Asked Questions
Is VGSH a good investment during rising interest rates?
Yes, VGSH's short duration makes it less sensitive to interest rate hikes compared to longer-term bonds, though it is not entirely immune to price declines when rates rise.
How often does VGSH pay dividends?
VGSH pays monthly dividends, derived from the interest income generated by its holdings of U.S. Treasury securities.
Can VGSH lose money?
While VGSH is low-risk, it can experience minor price declines due to interest rate movements. However, its short duration and Treasury backing minimize the likelihood of significant losses.
What is the difference between VGSH and a money market fund?
VGSH invests in Treasuries with 1–3 year maturities, offering slightly higher yield potential than money market funds, which typically hold very short-term instruments. However, money market funds aim for stable NAV (net asset value), while VGSH's share price can fluctuate.
Industry Overview
The Vanguard Short-Term Treasury ETF (VGSH) is part of the short-term fixed-income ETF category, which focuses on U.S. Treasury securities with maturities of one to three years. This segment is favored by investors seeking safety, liquidity, and minimal credit risk. Short-term Treasury ETFs like VGSH are often used in portfolios to reduce overall volatility, provide steady income, or serve as a temporary holding during market uncertainty. The short duration makes these funds less sensitive to interest rate changes compared to intermediate or long-term bonds, appealing to conservative investors or those with a near-term investment horizon.
Alternative Comparison
Compared to its peers, VGSH stands out for its ultra-low expense ratio (0.04%), which is competitive even among other low-cost Treasury ETFs like iShares' SHY (0.15%) and Schwab's SCHO (0.03%). Unlike some actively managed short-term bond funds, VGSH offers pure exposure to U.S. Treasuries without credit risk from corporate or municipal bonds. SPTS (SPDR Portfolio Short Term Treasury ETF) is another close competitor, but VGSH typically has higher liquidity and tighter spreads. While GBIL (Goldman Sachs Access Treasury 0-1 Year ETF) focuses on even shorter maturities, VGSH provides slightly higher yield potential with marginally more duration risk.
Issuer Overview
Vanguard is one of the world's largest investment management companies, known for its low-cost index funds and ETFs. Founded in 1975, Vanguard operates as a client-owned mutual fund structure, allowing it to pass on cost savings to investors. The company is a pioneer in passive investing and has a strong reputation for transparency, investor-friendly practices, and long-term performance. VGSH is part of Vanguard's extensive lineup of fixed-income ETFs, which are designed to provide diversified, low-cost exposure to various segments of the bond market.
Conclusion
VGSH is a compelling choice for investors seeking low-risk, short-term exposure to U.S. Treasury securities. Its passive strategy, low costs, and high liquidity make it an efficient tool for capital preservation, income generation, or reducing portfolio volatility. While it may not offer the yield of longer-term bonds or corporate debt, its stability and credit quality are unmatched. For conservative investors or those with a short-term horizon, VGSH represents a core holding in the fixed-income portion of a diversified portfolio.
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