TLT vs ZROZ

TLTBiShares 20+ Year Treasury Bond ETF

ZROZBPIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund

In short

TLT The long bond's most famous ticker. iShares launched TLT in 2002, and it became the default way to take a view on 20-year-plus Treasuries: index-tracked, heavily traded, with a deep listed options market.

ZROZ Nothing but Treasury principal STRIPS, 25 years and out, with zero coupons attached. PIMCO launched it in 2009, and it reacts to long-rate moves harder than standard long Treasury funds.

Stated mandate

TLT The fund seeks to track an index of U.S. Treasury bonds with remaining maturities greater than twenty years, providing targeted exposure to long-duration government debt.

ZROZ The fund seeks total returns that closely track the ICE BofA Long US Treasury Principal STRIPS Index before fees and expenses. It normally invests at least 80% of assets in the index's component securities.

Why people hold it

• TLT Pure long-duration Treasuries: it tracks the ICE U.S. Treasury 20+ Year Bond Index, government debt maturing in 20 years or more, no corporate credit, no short-end dilution.ishares.com
• One of the most actively traded bond ETFs, with a deep listed options market around it, so positions and hedges can be built and unwound on-screen.marketchameleon.com
• Running since 2002 and now a multi-billion-dollar fund, paying distributions monthly.

• ZROZ Pure duration, undiluted: it holds the final principal payments of long Treasuries, which make no interest payments until maturity, so price action is driven almost entirely by long rates.pimco.comtreasurydirect.gov
• The original on this exposure. Trading since 2009, it beat the other ETF tracking the same STRIPS index (GOVZ) to market by more than a decade.sec.gov
• It sticks close to its STRIPS index rather than wandering, one of the tighter tracking jobs among long Treasury funds, and it is a multi-billion-dollar fund that trades actively.
• Credit risk isn't the story here: every position is a US Treasury principal payment, not corporate paper.pimco.com

Worth knowing

• TLT You pay for that liquidity: 0.15% a year, while BBLB tracks the very same index for 0.04% and VGLT charges 0.03% for long Treasuries.
• Long duration cuts both ways. Bonds this far out the curve move sharply when long-term yields shift, so the ride is far more volatile than a short-term Treasury fund.ishares.com
• Concentrated by design: roughly 50 Treasury bonds clustered at the long end, and the monthly payout floats with the coupons of whatever the index holds.

• ZROZ Duration cuts both ways. With no coupons to cushion, rate moves hit the price harder than in standard 20+ year Treasury funds, and declines can run deep.treasurydirect.gov
• At 0.15% it sits at its group's median, while VGLT (0.03%) and BBLB (0.04%) price long Treasury exposure lower, using coupon bonds rather than STRIPS.
• The STRIPS pay nothing until maturity, yet the fund distributes quarterly, so payouts reflect accrued discount rather than coupon checks arriving in the portfolio.treasurydirect.gov

Full TLT profile⁠

Full ZROZ profile⁠