The Uncertain Paths of Treasury Bond ETFs: Vanguard vs. iShares

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Ah, the bonds. A world of predictability cloaked in illusion, where the soul of the investor searches for solace in a realm governed by the unyielding hands of time and interest rates. In this peculiar theater, the Vanguard Long-Term Treasury ETF (VGLT) and the iShares 20+ Year Treasury Bond ETF (TLT) play their roles – so similar yet so devastatingly different. Both are woven from the same fabric, long-term U.S. Treasury bonds that boast the divine protection of the government’s credit, but within them, there lies a dissonance that no mere investor can ignore.

Snapshot (cost & size)

Metric TLT VGLT
Issuer iShares Vanguard
Expense ratio 0.15% 0.03%
1-yr return (as of Oct. 31, 2025) 1.84% 2.73%
Dividend yield 4.3% 4.4%
Beta -0.32 0.04
AUM $49.7 billion $14.3 billion

Beta, the silent arbiter of volatility, whispers to us of the storm that is ever at hand, ready to descend upon these funds.

The numbers stand before us, stark and immutable – TLT, with its slightly higher expense ratio, clings to its grander scale, boasting an AUM that dwarfs its rival’s in an attempt to provide an illusion of stability. Meanwhile, VGLT, its quieter, humbler counterpart, offers respite from this chaos with its far lower expense ratio, making the prospect of long-term investment far more palatable to those wary of the constant tug of rising costs. A yield of 4.4% compared to 4.3% is hardly a difference to raise a cry, but within this faint distinction, there lies a testament to VGLT’s ability to cater to the mind that seeks peace over grandiosity.

Performance & risk comparison

Metric TLT VGLT
Max drawdown (5 y) -47.75% -45.47%
Growth of $1,000 over 5 years $576 $552

The mind, ever seeking stability, can find little satisfaction here. Both of these instruments, in their pursuit of something greater, have endured wounds – deep, scarred losses that betray their seemingly inviolable status. The numbers tell the tale of a bitter journey, one where the investor might feel the pull of defeat, with neither ETF emerging as a glorious victor in terms of growth. The question looms: how much faith does one place in a financial system that teeters on the edge of catastrophic loss?

What’s inside

VGLT, with its broad and diverse portfolio of U.S. Treasury bonds maturing in the ten to twenty-five-year window, might seem to offer a more varied path. It carries 96 securities, with its strongest, most persistent holdings rooted in U.S. Treasury notes and bonds. With a long history, a track record stretching to 16 years as of November 2025, it is a silent guardian for those who seek order within a universe that constantly shifts. Moreover, VGLT’s adherence to ESG principles – a moral compass, perhaps? – may seem like a farce to some, but for those who still dream of a world where investment can align with a higher ethical standard, this is a saving grace.

And then there is TLT, whose focus is far more singular, concentrated only on bonds maturing beyond the 20-year mark. With just 46 holdings, it limits its scope in the pursuit of purity – or perhaps a stubborn sense of purpose. TLT does not pretend to care for ESG considerations. It sees no need for such adornments. It is what it is, indifferent to the world’s mores and ethical dilemmas.

What a tragic contrast, one might say, between the world of those who seek to reconcile finance with righteousness, and those who are driven solely by the cold mathematics of yield and duration.

Foolish take

And here, in the most bitter of realizations, we face the essential truth: both ETFs offer a mirage of safety and sound returns, yet neither can shield you from the storm that is bound to come. VGLT, with its modest expense ratio, spreads itself across a greater spectrum of bonds, providing some hope for diversification. But in that very diversity, there is risk. A broader spread is a more scattered, more fragile thing – vulnerable to fluctuations, to the cruelty of time.

In contrast, TLT, with its narrow focus, stands like a titan in the field of long-maturity bonds, its larger assets under management offering liquidity like a river that has run too wide and too fast. Those who trade frequently might feel an unspoken allegiance to its liquidity, but for the long-term investor, the tightness of the portfolio may offer the serenity of a well-ordered life.

Which, then, is better? The answer is not simple, for it depends on the soul that stands before the choice. Is it the pragmatic soul, drawn to lower costs and the idea of eventual, incremental peace? Or is it the more daring spirit, craving the rush of deeper liquidity, yet perhaps never fully understanding the price it may pay?

Glossary

ETF: Exchange-Traded Fund; a collection of securities, a single entity bound together for trade on the exchange.
Expense ratio: The fee charged annually by a fund, like an unyielding hand that takes its share of your wealth.
Dividend yield: The portion of a fund’s dividend payout relative to its share price, as a percentage, a fleeting return on the fleeting moments of time.
Beta: The measure of a fund’s volatility, revealing the existential turmoil of its movements in relation to the overall market.
AUM: Assets Under Management; the sum of the wealth entrusted to the fund, growing or shrinking with the whims of fate.
Max drawdown: The largest observed loss from a fund’s peak value, a stark testament to the fragility of even the grandest structures.
ESG screen: The moral framework that some investors apply, questioning whether their wealth will hurt or heal the world.
Securities: Financial instruments that serve as the currency of the markets, like coins in a never-ending game.
Portfolio: A collection of assets, a life’s work bound together, fragile in its cohesion.
Treasury bond: A long-term promise from the government to pay its debt, secure and unwavering, like a distant star.
Maturity: The time until a bond is repaid, a marker of destiny itself.
Yield: The return on an investment, the bitter fruit of a long wait.

In the end, one must wonder – is it worth the cost, the risk, the time? A simple question, yet so profoundly difficult to answer. 🤔

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2025-11-08 18:17