VGLT vs ZROZ

VGLTAVanguard Long-Term Treasury ETF

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

In short

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.

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

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.

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

• 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.

• 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

• 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.

• 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 VGLT profile⁠

Full ZROZ profile⁠