What Is SCHO? Schwab Short-Term U.S. Treasury ETF
Last updated September 2026
Short answer
SCHO is Schwab Short-Term U.S. Treasury ETF, an ETF that tracks an index of short-maturity US Treasury securities at a 0.03% expense ratio. SCHO holds short-maturity US Treasury debt and nothing else. There are no corporate bonds, no mortgage securities and no foreign issuers, so the one meaningful risk left is that interest rates move. Because the bonds mature quickly, even that is muted: the portfolio rolls into newly issued securities at prevailing rates within a couple of years rather than being locked in for a decade. The yield is 3.90 percent and the fee is 0.03 percent, which for a fund whose entire job is to sit at the safe end of the curve is close to the floor. Assets are $13.0 billion.
SCHO is issued by Schwab Asset Management and tracks an index of short-maturity US Treasury securities. It charges a 0.03% expense ratio, holds approximately $13.0B in assets under management, yields about 3.90%, and launched in 2010.
What remains once credit risk is removed
Most bond funds pay their yield for a bundle of reasons: the borrower might default, the security might be hard to sell, the structure might behave unexpectedly. SCHO strips all of that away. US Treasury debt carries no meaningful default risk and trades in the deepest fixed income market in the world. What is left is the pure price of lending money to the government for a short period, which is roughly what the 3.90 percent yield represents.
That simplicity is the point of the fund and also its limit. There is no credit spread to earn, so in periods when investors are being paid well to take corporate risk, SCHO will pay less than a comparable corporate bond fund. In periods when that risk turns out badly, it will not participate in the losses either. The fund is a specific instrument for a specific job, not a general-purpose bond holding.
The yield is a moving number, not a coupon
A holder of an individual short Treasury locks in a rate to maturity. A holder of SCHO does not, because the fund continuously sells bonds as they approach maturity and buys newly issued ones. If policy rates fall, the fund reinvests at lower yields and the distribution follows within months. If rates rise, the same mechanism works in the holder's favour, and faster than it would in a long-maturity fund.
This is why short Treasury funds are often described as tracking the front of the curve rather than owning a fixed income stream. The 3.90 percent figure describes what the portfolio is currently paying. It is a reading of present conditions, not a commitment. Anyone who needs a rate fixed for a known period is generally better served by buying a Treasury security directly and holding it to maturity.
Where it sits between cash and a core bond fund
SCHO occupies a narrow band on the risk spectrum. It carries more price variability than a money market fund, whose holdings mature in weeks, because a bond with a year or two remaining still reprices when rates change. It carries far less than an intermediate or long Treasury fund, where a move in rates is amplified by the number of years remaining on the bonds. That middle position is what people are usually buying.
The practical uses follow from that. It suits money with a horizon measured in a small number of years, or an allocation intended to hold its value while an investor waits. It does not suit anyone hoping bonds will rally hard when equities fall, because that defensive kick comes from long duration, which SCHO deliberately does not have. At 0.03 percent the fee takes almost nothing out of a modest yield.
SCHO holdings: top 10
Approximate weights as of August 2026. Each ticker links to its individual stock guide in Walnut.
| Rank | Ticker | Company | % of SCHO |
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How do I invest in SCHO?
There are three common ways to get SCHO exposure. Buy shares (or fractional shares) of SCHO directly at any major broker that lists it. Hold it as a core position and layer more concentrated ideas on top. Or build it into a thematic portfolio in Walnut, so SCHO sits alongside other holdings that express the same thesis, with target weights you can rebalance toward. SCHO trades like a stock during market hours, so you buy it the same way you would any listed share.
New to buying funds? See how to buy an ETF, step by step.
Is SCHO a good buy?
Whether SCHO is a good buy depends less on any single call and more on your time horizon and what you already hold: it tracks an index of short-maturity US Treasury securities, so the real question is whether you want that exposure in your mix and at what weight. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is SCHO a buy?
The bottom line on SCHO
SCHO gives you an index of short-maturity US Treasury securities exposure in one ticker at a 0.03% expense ratio. Most investors use it as a core holding and layer more concentrated thematic portfolios on top.
More on SCHO
Whether SCHO is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is SCHO a buy?
SCHO yields 3.90% as of August 2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see SCHO dividend: yield and schedule.
New to funds like SCHO? Start with what an ETF is, then how to buy an ETF, or browse the full guide to ETF investing.
Wondering how SCHO fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in SCHO with AI
Connect the broker you already use and ask Walnut's AI how SCHO fits what you actually hold: what it overlaps with, what it leaves you exposed to, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
Does SCHO carry any credit risk?
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Effectively none in the usual sense. Every holding is a direct obligation of the US Treasury, which is the reference point against which other borrowers are priced rather than a credit that carries a spread. There is no corporate, mortgage or foreign exposure in the fund. The risk that remains is the effect of changing interest rates on the price of the bonds it holds.
Can SCHO lose money?
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Yes, though modestly. When market interest rates rise, existing bonds become less valuable and the fund's share price falls. Because the holdings mature in a small number of years, the effect is limited and tends to be recovered as the portfolio rolls into higher-yielding new issues. It is not a fund that holds a constant value, which is a common misunderstanding.
How does it differ from a money market fund?
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Money market funds hold very short instruments and are managed to keep a stable value, which SCHO is not. SCHO's holdings run to a small number of years, so its price moves with rates while a money market fund's generally does not. In exchange, SCHO usually captures rate changes with a lag, holding its yield a little longer when policy rates fall.
Why does the 3.90 percent yield change over time?
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Because the fund continually replaces maturing bonds with new ones issued at current rates. The distribution reflects whatever the front of the Treasury curve is paying at the time rather than a coupon fixed when you bought. A fall in short-term rates flows through to the payout within months, and a rise does the same in the other direction.
How is SCHO different from an intermediate or long Treasury fund?
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The credit is identical. The difference is duration. A longer-maturity Treasury fund gains more when rates fall and loses more when they rise, sometimes by a wide margin. SCHO trades most of that sensitivity away. That makes it steadier, and also means it will not deliver the sharp gains a long Treasury fund can produce during a flight to safety.
Is 0.03 percent competitive for short Treasury exposure?
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It is at the low end of what the category charges. Since every fund in this space holds essentially the same government securities, cost is one of the few things that separates them, along with the exact maturity band the index specifies. Differences in the maturity range have more effect on behaviour than a basis point or two of fee.
How is the income from SCHO treated for tax?
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Interest paid on US Treasury securities is generally exempt from state and local income tax, though it remains subject to federal tax, and that exemption passes through a fund that holds Treasuries. The size of the benefit depends on where you live and your own circumstances, so the fund's tax documentation and a tax professional are the right references rather than a general rule.
When is SCHO the wrong tool?
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When the goal is maximum income, since removing credit risk removes the compensation that comes with it. It is also the wrong choice for anyone wanting bonds to act as a strong counterweight to equity losses, which depends on long duration. And for money needed within weeks, a money market fund avoids the price movement SCHO can still show.
What is SCHO's expense ratio?
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SCHO has an expense ratio of 0.03% per year as of August 2026, charged by Schwab Asset Management and deducted from the fund's value rather than billed to you separately. On a $10,000 position that is roughly $3 a year. Fees compound over time, so on a long-term holding the expense ratio is one of the few return drivers you control. It is worth comparing against other funds that track an index of short-maturity US Treasury securities before you choose.
How do I compare SCHO to similar ETFs?
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Put a few fields side by side: the expense ratio (fees compound over decades), the index or strategy it tracks, the top holdings and how much they overlap with what you already own, the dividend yield, and the AUM, liquidity, and bid-ask spread that affect trading costs. For index funds, tracking error (how closely it follows its index) and tax efficiency matter too. SCHO's figures are above; the full method is in Walnut's guide on how to compare ETFs.
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Walnut is informational, not investment advice. Holdings weights and fund statistics on this page are approximations stamped to August 2026; verify current figures against Schwab Asset Management's fund page or your broker before investing.