SCHO — Schwab Short-Term US Treasury ETF
SCHO is Schwab's short-term Treasury ETF, tracking 1–3 year US Treasuries at an industry-leading 0.03% expense ratio — tied for the lowest cost in its category. It is functionally nearly identical to iShares' SHY but priced more aggressively, making it a compelling choice for cost-conscious investors on the Schwab platform. SCHO provides pure US government credit quality at minimal duration risk.
Top Holdings
Strategy
- →Use as the short-duration anchor in a Treasury bond ladder
- →Hold as a near-cash government bond position earning Treasury bill rates
- →Pair with SCHR and long-duration funds for a complete Treasury ladder
- →Use in taxable accounts for capital preservation with federal income (state-exempt in many states)
Best For
- ✓Schwab platform investors who want the lowest-cost short-term Treasury exposure
- ✓Conservative investors seeking pure government bonds at the short end of the curve
- ✓Those building a low-cost Schwab-ecosystem portfolio wanting a bond core
- ✓Capital preservation investors who want short-duration government backing
Key Risks
- ⚠Very low yield in low-rate environments
- ⚠Reinvestment risk when short-term rates fall
- ⚠Opportunity cost versus higher-yielding intermediate or long-term Treasuries
- ⚠Not FDIC insured
Similar ETFs
Frequently Asked Questions
How does SCHO compare to SHY?
SCHO and SHY both track 1–3 year US Treasury indexes but SCHO charges 0.03% versus SHY's 0.15%. For long-term investors, SCHO's lower cost is a meaningful advantage. Performance should be nearly identical otherwise. This is educational content, not financial advice.
Is SCHO only for Schwab customers?
No, SCHO is a publicly traded ETF available on any brokerage platform. Schwab customers may get commission-free trading, but any investor can purchase SCHO. This is educational content, not financial advice.
Does SCHO income have state tax benefits?
In many states, interest from US Treasury securities is exempt from state income tax. SCHO's distributions may qualify for this exemption depending on your state's tax rules. Consult a tax advisor for your specific situation. This is educational content, not financial advice.
What is SCHO's duration?
SCHO has a duration of approximately 1.8–2 years, very similar to SHY. This makes it one of the lowest-duration bond ETFs that still earns meaningful Treasury yields. This is educational content, not financial advice.
Does SCHO pay monthly dividends?
Yes, SCHO distributes monthly income from its short-term Treasury holdings. This is educational content, not financial advice.
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