The short answer is that in the end we believe most investors will be better off buying Treasury securities through mutual funds rather than directly. But each source has its pros and its cons.
The main advantage of buying directly from the Treasury is that you avoid mutual fund costs, which can erode your returns. However, buying directly involves some obstacles that may or may not be significant to you.
If you want to sell a Treasury security before its maturity, you will have to meet a minimum holding period and pay a nominal transaction fee on the sale. If you buy directly, you’ll be responsible for tracking maturities and reinvesting principal and interest. If you delay reinvesting these amounts, your return may suffer while your money is in cash.
The main advantage of owning Treasury securities through a mutual fund is convenience. Unless you choose to receive interest and/or principal payments in cash, a fund will reinvest those amounts at the current interest rate. In a mutual fund, you can buy and sell whenever you like without a minimum holding period.
In the final analysis it is up to you. If you can reliably manage the interest and principal payments, then you can save money buying directly from the Treasury. If you’re willing to pay for these services, consider using an exchange-traded fund or a low-cost fund such as those offered at Vanguard.