Vanguard vs. Schwab Short-Term Treasury ETFs: Which One Delivers the Better Safe-Haven Return?

The primary difference between the Vanguard Short-Term Treasury ETF (VGSH +0.00%) and the Schwab Short-Term U.S. Treasury ETF (SCHO +0.04%) is their issuer, as both funds provide nearly identical exposure to short-duration government debt.

These two exchange-traded funds (ETFs) serve as defensive pillars for income-focused investors who prioritize capital preservation. By targeting U.S. Treasury notes with maturities of one to three years, they provide a reliable haven from stock market volatility while generating steady interest income with virtually zero credit risk from the federal government.

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Both funds are exceptionally efficient, sharing an identical 0.03% expense ratio that ranks among the lowest in the industry. Because they track nearly the same segment of the yield curve, the choice between them is largely a matter of issuer preference.

Schwab Short-Term U.S. Treasury ETF is a fixed-income fund with no equity sector breakdown. It holds 97 securities and follows a highly diversified approach, with no single position exceeding 0.08% of the total portfolio. This fund was launched in 2010. Schwab Short-Term U.S. Treasury ETF has paid $0.91 per share over the trailing 12 months, which, at its recent ~$23.82 share price, works out to a 3.8% yield.

Vanguard Short-Term Treasury ETF is also a fixed-income fund with no equity sector breakdown. This fund was launched in 2009. Vanguard Short-Term Treasury ETF has paid $2.19 per share over the trailing 12 months, which, at its recent ~$57.5 share price, works out to a 3.8% yield.

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VGSH and SCHO are both excellent, low-risk short-term Treasury ETFs, and neither is clearly superior to the other.

Given their nearly identical missions, duration, costs, and long-term performance, VGSH and SCHO are much more alike than different. For most investors, the choice will not materially change risks or expected return.