TLT Competitors Rake in Assets Even as Prices Drop

Investors are betting that interest rates will fall.

Senior ETF Analyst
Reviewed by: Staff
Edited by: Mark Nacinovich

A lot of digital ink has been spilled about iShares 20 Plus Year Treasury Bond ETF (TLT) and its massive inflows this year.

The fund has picked up $17.9 billion in new assets in 2023 despite its 13.4% drop in price, as many investors see a compelling opportunity in long-term bonds with interest rates on the 30-year Treasury near 5%. 

TLT isn’t the only exchange-traded fund investors are using to bet on long-term Treasury bonds. The Vanguard Long-Term Treasury ETF (VGLT), the SPDR Portfolio Long Term Treasury ETF (SPTL), the PIMCO 25+ Year Coupon U.S. Treasury Index ETF (ZROZ) and the Schwab Long-Term U.S. Treasury ETF (SCHQ) are also seeing heavy demand. 

VGLT is the next-most-popular fund in the segment after TLT, with year-to-date inflows of $4.1 billion. Its expense ratio of 0.04% is low, but not the lowest among its peers.  
SPTL and SCHQ are the cheapest funds targeting long-term Treasuries, with expense ratios of 0.03%. They have registered inflows of $2.1 billion and $300 million, respectively, this year. 

Both ETFs, however, are slightly less interest rate sensitive than TLT because they hold Treasuries with maturities of more than 10 years, compared with more than 20 years for TLT.  

Still, the difference isn’t that much. TLT has an effective duration of 16.35 years, just slightly ahead of SCHQ’s 16 years and SPTL’s 15 years. VGLT has a duration of 15.1 years.  

Duration is a measure of interest rate sensitivity. The higher the duration, the more sensitive a bond ETF’s price is to interest rate movements.  

Many ETF investors have been buying TLT and similar funds as a bet on falling interest rates. If rates fall, these ETFs could rise significantly.  

Price Appreciation for Bond ETFs  

For some investors, the potential price appreciation in bond ETFs is all that matters. They aren’t buying these funds for income and distributions.  

For them, ZROZ, which has inflows of more than $400 million this year, makes sense. ZROZ holds STRIPS, or “separate trading of registered interest and principal of securities,” a type of bond that pays no interest until maturity. 

ZROZ holds STRIPS on 25+ year Treasury bonds, giving it an effective duration of 26.2 years. That makes it much more interest rate sensitive than even TLT. 

Leveraged ETF 

ZROZ’s high interest rate sensitivity appeals to investors whose priority is potential bond price appreciation. Another ETF that scratches a similar itch is the Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF).  

As a leveraged fund, TMF is even riskier and more volatile than ZROZ, but that hasn’t stopped investors from plowing nearly $2.9 billion into this fund this year on hopes that rates will drop and bonds will rebound. 

Those bets haven’t worked out so far. TMF is down a whopping 45.5% so far this year, on top of a monster 72.6% decline last year.  

TMF is the starkest example of bets on long-term Treasuries going wrong, but anyone who has bought into ETFs targeting long-term Treasuries is deep under water this year. 

Sumit Roy is the senior ETF analyst for, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for, with a particular focus on stock and bond exchange-traded funds.

He is the host of’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays,’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.