Investors Shift Cash to 1-3 Month T-Bill ETF CSHI

Investors and advisors have moved assets into the NEOS Enhanced Income 1-3 Month T-Bill ETF (CSHI). The fund roughly doubled in size over the past eight months and shows a 30-day SEC yield of 3.26%.

About $8 trillion is held in U.S. money market accounts and funds. As yields on basic cash instruments and high-yield savings accounts declined, some advisors reallocated portions of client cash to alternatives such as CSHI.

CSHI is actively managed. The fund buys one- to three-month Treasury bills and writes call options on those bills. The strategy keeps maturities short while generating option premium income, which contributes to the published SEC yield and has coincided with recent inflows.

Market participants cite rising odds of Federal Reserve tightening as a factor behind interest in the fund. A Bank of America report wrote that the Fed’s inflation problem “has gotten unambiguously worse” and flagged the potential for rate increases later this year. Traders on the Kalshi exchange are pricing at least one rate increase before 2027. U.S. Bank observed that “for investors, this environment rewards discipline more than prediction.”

The fund’s holdings roll quickly, which limits direct exposure to longer-term rate moves. The options overlay can reduce upside in some scenarios and introduces derivative-related and operational risks. Short-duration Treasury bills reduce interest-rate sensitivity but do not eliminate market or liquidity risk.

Advisors with cash mandates balance principal protection and liquidity needs while seeking yield. Some have shifted portions of cash into CSHI to capture the ETF’s reported SEC yield without extending maturities. Institutional treasurers and retail investors preferring a single ETF vehicle have also added to flows.

Flows into CSHI reflect investor interest in higher-yielding, low-duration cash alternatives amid lower money-market returns and changing expectations about the path of short-term interest rates.