NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI)
CSHI holds a portfolio of U.S. Treasury bills — the safest short-term debt instruments issued by the federal government — with remaining maturities between one and three months. Treasury bills are IOUs from the U.S. Treasury that mature in less than a year, backed by the full faith and credit of the United States government. This fund offers investors a simple way to earn the prevailing short-term interest rate on a ladder of such bills.
What Treasury bills are
Treasury bills are short-term borrowing instruments issued directly by the U.S. Treasury Department. When the government needs cash and wants to pay it back within a few months rather than years, it issues bills. These are auctioned weekly at prices below face value — you might pay $98 for a $100 bill — and the difference is your gain. At maturity, you receive the full $100. The effective interest rate is calculated from this discount.
Bills are the closest thing to risk-free borrowing that exists in the financial system. They carry no credit risk — the U.S. government is not going to default on a debt it can pay in its own currency by simply printing money. Bills are also highly liquid; they trade constantly, and huge volumes mean transaction costs are tiny. For someone needing to park cash safely, bills have historically been the starting point.
How the fund works
CSHI assembles a portfolio of Treasury bills across the one- to three-month maturity spectrum — what is called a ladder. As each bill matures, the fund reinvests the proceeds into new bills, rolling forward the ladder. This constant rebalancing means the fund always holds a mix of bills maturing soon, bills maturing in a few weeks, and bills maturing in two to three months.
The fund is passive. It does not attempt to predict interest rates or play the bond market. It simply tracks an index of Treasury bills in its target maturity range, replicating the yield of that index. The portfolio turns over dramatically — every bill eventually matures — but the turnover is entirely mechanical and creates no trading costs because bills are so liquid.
Income and safety
The fund generates income purely from the discount at which bills are purchased. If short-term interest rates are rising, newly issued and rolling bills pay higher rates, lifting the fund’s yield. If rates are falling, yields decline. The fund has no price appreciation or depreciation because bills are so short-lived and backed by the government. You essentially earn whatever the prevailing short-term risk-free rate is, with minimal overhead.
The safety is nearly absolute. Bills are backed directly by the U.S. government and mature so quickly that interest-rate risk is negligible. The price of a bill does fluctuate on the secondary market if rates move dramatically, but the moment it matures — which is very soon — you get your full dollar back. There is no default risk, no inflation-adjusted value loss (though inflation does reduce purchasing power), and no credit uncertainty.
“Enhanced income” explained
CSHI is branded as an “enhanced income” fund. This suggests the fund is designed to offer a yield that is competitive with or slightly above simple Treasury bill holdings. This might be achieved through slight market-timing of rolling decisions, precise ladder construction, or by negotiating favorable terms with Treasury counterparties. The enhancement is modest — the fund is not chasing yield by taking on credit risk — but it acknowledges that a professionally managed T-bill fund can nudge returns above the raw T-bill rate by a few basis points through operational skill.
When to use this fund
CSHI is best thought of as a cash-equivalent, not as an investment vehicle. Investors use it when they have money they cannot afford to lose — perhaps cash waiting to be deployed into stocks, or emergency reserves — and they want that cash to earn the current safe rate rather than sit in a non-yielding savings account. In an environment where short-term rates are elevated (as they were in 2023–2024), the fund can deliver several percent per year, making it attractive as a very short-term parking spot.
The fund is also useful for institutions that need to allocate a portion of assets to capital preservation — such as pension funds reserving for near-term obligations — or for retirees who want predictable, safe income from a portion of their portfolio.
It is not an investment for growth, diversification, or long-term wealth building. The fund will never deliver equity-like returns, and its value moves almost not at all, which is precisely the point.
Expense ratios and costs
NEOS funds typically charge modest annual expense ratios, often in the range of 0.1% to 0.25% for Treasury-holding funds, depending on fund size and the specific strategy. This is low compared to stock or bond funds but represents real drag on a fund earning perhaps 4–5% from T-bills, since 0.2% of that is a meaningful slice. For very small positions or very short holding periods, this fee can outweigh the income benefit of owning the fund versus keeping cash elsewhere.
How to research this fund
Compare CSHI to other very short-term Treasury funds and to the raw Treasury bill rate itself. Check the prospectus for the expense ratio, the typical holdings maturity, and whether the fund can invest in other short-term government instruments (such as those of federal agencies) if desired. Look at the fund’s yield over the past year relative to the three-month Treasury rate to see whether the “enhancement” has materialized.
Understand the current short-term rate environment: if the Federal Reserve is expected to cut rates significantly, the fund’s yield will decline, making it a less attractive holding going forward. If rates are stable or expected to rise, the fund will continue to pay the new higher rates as existing bills mature.