Is Vanguard's Short-Term Treasury ETF A Good Replacement For Cash?

(7min)

Summary

  • Vanguard Short-Term Treasury Index Fund ETF Shares' effective duration of two years makes it suitable for medium-term holding but less ideal for short-term cash storage due to interest rate sensitivity.
  • The VGSH ETF's share price in the upper 50s is slightly low, impacting the bid-ask spread and making it less efficient for frequent trading.
  • With an expense ratio of 0.04%, VGSH offers a cost-effective option compared to the average 0.6% for similar ETFs (as selected by Vanguard), making it attractive for investors.
  • I would immediately trash on any short-term Treasury ETF with a 0.6% expense ratio.
  • Given the current macro environment, holding cash or cash-equivalent ETFs is prudent, offering stability and a respectable return amidst high short-term interest rates and economic uncertainties.
  • Looking for a helping hand in the market? Members of The REIT Forum get exclusive ideas and guidance to navigate any climate. Learn More »

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SeventyFour

Vanguard's short-term treasury ETF Vanguard Short-Term Treasury Index Fund ETF Shares (NASDAQ:VGSH) is similar to several other short-term treasury ETFs. The most relevant factors are the expense ratio, the share price, and the effective duration.

Duration and Share

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This article was written by

Colorado Wealth Management is a REIT specialist who began his decades-long investment career in a family-owned realtor office before launching his own company and embracing his drive for deep-dive REIT analysis. He holds an MBA and has passed all 3 CFA exams. He focuses on Equity REITs, Mortgage REITs, and preferred shares. Scott Kennedy is a Certified Public Accountant and Certified in Financial Forensics. He is currently a partner at a national accounting firm.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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About VGSH ETF

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