SGOV Stock Recent News

ETFs pulled in $29.5 billion in capital last week, with U.S. equity leading the way.

SGOV and SHV can appear interchangeable for many investors as cash replacement - for good reasons. However, a closer examination leads me to prefer SGOV for this purpose. For the purpose of parking cash, I ideally want an ETF with no fees, zero price volatility, and maximum yield.

Investors have upped their interest in actively managed bond ETFs, pouring record capital into them in January as some paid up in hopes of stronger returns.

My previous short term SGOV trade recommendation was a poor choice in hindsight. The S&P rally began shortly after that call. US equities remain massively overvalued, with the Buffett Indicator showing stocks priced more than double the size of the economy and a historically low dividend yield. The emergence of DeepSeek-R1 challenges the AI capex growth narrative, potentially impacting high-cost LLM monetization models from US businesses like OpenAI.

I am downgrading SGOV from bullish to neutral due to anticipated declining yields as the Fed continues to cut rates. SGOV has been a strong cash proxy, but its yield is expected to fall below 4% by year-end, making it less attractive. I am shifting my focus to TLT, which I believe will outperform SGOV as long-term bond yields increase and the Fed lowers rates.

ETFs had a standout year in 2024, seeing over $1 trillion in flows for the first year in history. Total ETF assets under management grew to an impressive $10.4 trillion by year end thanks to strong flows and price appreciation.

I am upgrading SGOV to a "strong buy" due to its better trade-offs for cash compared to CDs, given the current rate environment. SGOV offers stability and liquidity, with a FWD yield of 5.10%, making it a preferable option over CDs amid fluctuating rates. CDs present reinvestment risks, especially if rates drop significantly; SGOV mitigates this risk with its flexibility and liquidity.

The Fed's new easing cycle is steepening the yield curve. 2s10s have dis-inverted. 3M yields could follow. The rare situation which made iShares® 0-3 Month Treasury Bond ETF so attractive is likely coming to an end.

The Federal Reserve's unexpected 50 bps rate cut signals aggressive monetary easing, aiming for a soft landing encouraged by benign inflation data. SGOV, the iShares 0-3 Month Treasury Bond ETF, will see its yield decrease in line with Fed rate cuts due to its low duration. SGOV remains a robust cash-parking vehicle with low volatility and no credit risk, but its yield will decline, prompting a 'Hold' rating.

iShares 0-3 Month Treasury Bond ETF remains a top choice for low-risk, liquid investments amid potential rate cuts. SGOV offers capital preservation, high liquidity, competitive yield, and tax efficiency, making it an attractive option for cash reserves. Historical data shows SGOV's yield adapts swiftly to Fed policy changes, outperforming traditional savings accounts and money market funds.