GOVZ vs VGLT

GOVZBiShares 25+ Year Treasury STRIPS Bond ETF

VGLTAVanguard Long-Term Treasury ETF

In short

GOVZ Treasury bonds with the coupons stripped off, 25 years and out. No interest payments means extreme duration and price swings to match, for 0.10% net of a waiver through February 28, 2029.

VGLT Three basis points for the long end of the Treasury curve. VGLT tracks a market-weighted index of long-dated government bonds, pays income monthly, and charges a fraction of what this category typically costs.

Stated mandate

GOVZ The fund seeks to track an index of principal STRIPS from U.S. Treasury bonds with at least 25 years remaining to maturity.

VGLT The fund seeks to track a market-weighted Treasury index with a long-term dollar-weighted average maturity. It uses index sampling and invests at least 80% of assets in securities included in the target index.

Why people hold it

• GOVZ Tracks the ICE BofA Long US Treasury Principal STRIPS Index, the same index as ZROZ (0.15%), for 0.10% net of a waiver through February 28, 2029 (0.15% gross). Sits near the category median on fee.
• Owns only principal STRIPS, the zero-coupon remains of Treasury bonds. Because they make no periodic interest payments, duration runs longer and rate moves land harder than on traditional notes and bonds.sec.gov
• Pays monthly, even though the bonds inside send no coupons. The underlying paper is US Treasury obligations, with no corporate credit in the mix.

• VGLT 0.03% a year, a fifth of TLT's 0.15% and the lowest fee among its long-Treasury peers.vanguard.com
• Sticks to the mandate: index sampling of the Bloomberg U.S. Long Treasury Bond Index, with at least 80% of assets in index securities and one of the tightest implementations in its group.vanguard.com
• Pure US Treasury paper, roughly 70 bonds, no corporate credit risk in the mix, with distributions paid monthly.vanguard.com
• A multi-billion-dollar fund that trades actively, which generally keeps bid-ask spreads modest for a long-bond vehicle.

Worth knowing

• GOVZ The flip side of max duration: the prospectus notes STRIPS market values generally swing more with interest rates than regular Treasuries. That works in both directions.sec.gov
• Cheaper long-Treasury options exist: EDV charges 0.05% (also STRIPS-based, different index) and VGLT 0.03% (coupon-paying bonds, shorter duration). Neither is a 25-year-plus principal STRIPS pure play.
• A mid-sized fund that trades more lightly than the category's giants, so bid-ask spreads can be wider, especially on large or off-hours orders.

• VGLT Duration is the point and the risk. Long maturities mean prices swing hard when long-term yields move, in both directions.
• Not a 20-year-and-out pure play. The benchmark is the broad long Treasury index, so duration runs shorter than TLT or BBLB and shorter still than sibling EDV.
• Fixed coupons from a government issuer: no credit spread to earn, and inflation erodes the real value of that income.

Full GOVZ profile⁠

Full VGLT profile⁠