A US exchange-traded fund that holds only Treasury bills is on the cusp of reaching the $100 billion mark — more than double the size of its closest competitor — as investors flock to products offering exposure to rising US interest rates.
BlackRock Inc.’s iShares 0-3 Month Treasury Bond ETF has attracted almost $30 billion this year, more than any other bond ETF, boosting its assets to $99 billion, according to data compiled by Bloomberg. It’s bigger than all but about 25 money-market funds, the largest of which, Fidelity Government Money Market Fund, held about $456 billion as of June 30.
Growth in money-market funds — whose combined assets have exceeded $8 trillion, more than double their 2020 level — and Treasury bill ETFs testifies to the appeal of US short-term interest rates that are expected to rise. And it’s been made possible by the expansion of US government borrowing, particularly in the form of bills.
“It’s really accelerated,” Steve Laipply, global co-head of iShares Fixed Income ETFs at BlackRock, said about the fund’s growth. “Investors view it as a place to earn yield while they’re trying to decide their next steps in allocation.”
Despite six interest-rate cuts by the Federal Reserve over the past two years putting downward pressure on the interest rates paid by Treasury bills and dividends of the funds that hold them, cash has outperformed bonds and provided a buffer from US stock market benchmarks near record highs.
Three-month Treasury bill yields are around 3.8%, down from multiyear highs near 5.5% reached in 2023. They’ve climbed from under 3.6% at the start of the year, however, in anticipation of at least one interest-rate increase by the Fed over the next year to combat inflation that has persisted exceeding its 2% target.
While investors in short-term interest rate products like money market funds and Treasury bill ETFs can benefit from Fed rate increases, longer-maturity bond funds are more likely to be hurt by expectations for rising rates, as their fixed-rate holdings mature less frequently.
That has hurt returns from bonds, along with elevated inflation and the prospect of expansion in the supply of Treasury notes and bonds to meet growth in the US borrowing need. A thousand dollars invested five years ago in Bloomberg’s US Aggregate Bond Index — whose corporate bond component also has seen explosive growth in recent years — was worth only about $1,004 as of June 30, while the same amount invested in Treasury bills was worth nearly $1,200.
And bills are on pace to outperform bonds for the fifth time in six years, returning about 1.9% so far this year, while the broader bond index is little changed. The phrase “T-bill and chill” has entered Wall Street’s lexicon as shorthand for earning yields with minimal risk.
Two other BlackRock ETFs that invest in the riskier corners of the bond market have recorded the largest outflows among fixed-income ETFs this year. Investors have pulled $3.2 billion from both the iBoxx USD High Yield Corporate Bond ETF and the 20+ Year Treasury Bond ETF.
The key difference between T-bill ETFs and money market funds that hold only Treasury bills concerns share price. Money‑market funds maintain a stable $1 share price, with dividends paid out as income rather than reducing net asset value. Treasury‑bill ETFs trade intraday, so their prices adjust when dividends are distributed. The iShares fund’s share price over the past year has ranged from $100.28 to $100.74.
Expense ratios tend to be higher for actively managed money-market funds than for ETFs. The average expense ratio for money market funds was about 0.24% in 2025, according to the Investment Company Institute. The iShares Treasury bill ETF’s is 0.09%.
Unlike money‑market funds, Treasury‑bill ETFs typically adjust to changes in short‑term interest rates more gradually because their portfolios reset only as underlying bills mature. That can leave them trailing money-market funds when the Fed is actively raising rates.
Since its May 2020 launch, the BlackRock fund has grown more quickly than any other bond ETF. With inflows averaging about $1 billion a week this year, it’s become the ninth-largest US bond fund, including ETFs and mutual funds other than money-market funds.
In comparison, BlackRock’s flagship bond ETF — the $139 billion iShares Core US Aggregate Bond ETF — took 20 years to reach the $100 billion mark.
“Rates are a little higher, and they’ll remain higher for longer,” said Tony Rodriguez, head of fixed-income strategy at Nuveen Asset Management. “We’re talking about 3% to 4% rates at the short end for a while.”
Facts Only
BlackRock’s iShares 0-3 Month Treasury Bond ETF has assets totaling $99 billion.
The fund attracted nearly $30 billion in inflows during the current year.
Fidelity Government Money Market Fund held approximately $456 billion as of June 30.
Combined assets in money-market funds exceed $8 trillion.
Three-month Treasury bill yields are approximately 3.8%.
Yields reached multiyear highs near 5.5% in 2023.
The iShares Treasury bill ETF has an expense ratio of 0.09%.
The average expense ratio for money market funds was approximately 0.24% in 2025.
$1,000 invested in Treasury bills five years ago grew to nearly $1,200 by June 30.
$1,000 invested in the Bloomberg US Aggregate Bond Index five years ago grew to $1,004 by June 30.
Investors withdrew $3.2 billion each from the iBoxx USD High Yield Corporate Bond ETF and the 20+ Year Treasury Bond ETF this year.
The iShares 0-3 Month Treasury Bond ETF launched in May 2020.
Executive Summary
Investors are increasingly shifting capital toward short-term US government debt, specifically Treasury bills and money-market funds, to capitalize on elevated interest rates while minimizing risk. This trend is evidenced by the rapid growth of the iShares 0-3 Month Treasury Bond ETF, which is nearing a $100 billion valuation. This preference for "cash" equivalents over longer-maturity bonds is driven by the anticipation of further Federal Reserve rate increases to combat persistent inflation, as well as a desire for a buffer against volatile equity markets.
While Treasury bill ETFs offer intraday trading and lower expense ratios compared to actively managed money-market funds, they adjust to rate changes more gradually. Conversely, longer-term bonds have suffered due to fixed rates maturing less frequently and an expanding supply of government debt. Despite six rate cuts over the last two years, the short end of the curve remains attractive, with yields expected to stay between 3% and 4% for the foreseeable future.
Full Take
The strongest version of this narrative is that a fundamental shift in risk aversion is occurring, where investors are abandoning traditional bond diversification in favor of "T-bill and chill" strategies—prioritizing liquidity and guaranteed short-term yield over the volatility of long-term debt and corporate credit.
The root cause is a paradigm shift in the "risk-free rate." For a decade, investors were forced into riskier assets to find yield; now, the cost of capital has reset, making the most conservative instruments highly competitive. This echoes the historical pattern of "flight to quality" during periods of macroeconomic uncertainty, but with a twist: the quality (US Treasuries) is now paying a premium.
The primary implication is a concentration of capital in the shortest end of the maturity curve. This creates a feedback loop where the US government's increasing borrowing needs are met by an insatiable appetite for bills, potentially masking the long-term instability of rising national debt. The beneficiaries are large asset managers like BlackRock, who capture massive inflows through low-cost, passive vehicles that provide minimal active management overhead.
Patterns detected: none
Counterstrike Scan: A coordinated campaign to push this narrative would use "FOMO" (fear of missing out) and a false binary—suggesting investors must choose between "safe" bills or "doomed" long bonds—to drive capital into specific fund products. The current content does not match this; it provides a comparative analysis of costs, structures, and historical returns without urgent calls to action.
Bridge Questions:
1. If the Fed pivots to aggressive rate cuts to stimulate growth, how quickly will the "T-bill and chill" crowd migrate, and will that cause a liquidity shock in the short-term market?
2. Does the explosive growth of these ETFs signal a lack of confidence in the long-term solvency or stability of the US corporate bond market?
3. How does the preference for ETF structures over traditional money-market funds change the systemic risk profile of the short-term lending market?
Sentinel — Human
This analysis presents a coherent, context-rich view on fixed-income market dynamics, characterized by an authoritative yet accessible synthesis of economic facts and investor sentiment.