Vanguard and Schwab long-term Treasury ETFs match on cost, diverge on yield
Investors seeking a hedge against falling interest rates and equity volatility can choose between two highly efficient long-duration government bond funds that share identical expense ratios but offer slightly different yields.
The Vanguard Long-Term Treasury ETF and the Schwab Long-Term U.S. Treasury ETF provide near-identical exposure to the long end of the U.S. government debt market. Both funds specifically target bonds with at least ten years until maturity, offering portfolio managers a precise tool to hedge against falling interest rates and broader economic volatility.
Because these funds concentrate heavily on the long end of the yield curve, their underlying assets are highly sensitive to monetary policy and interest rate shifts. Debt of this duration is backed by the full faith and credit of the federal government, making it a traditional safe haven that often provides a reliable hedge during equity market downturns.
Both exchange-traded funds are highly efficient vehicles for fixed-income allocation, charging investors a matching expense ratio of just 0.03 percent. The Vanguard fund, which was launched in 2009, currently holds 102 positions with maturities spanning ten to 25 years as it targets significant and steady current income for its shareholders.
The Schwab alternative is a more recent entrant to the space, having launched in 2019 to mirror a benchmark index tracking the long-duration Treasury segment. It maintains a slightly more concentrated portfolio of 100 individual holdings while still delivering the same broad government debt exposure.
While the two funds track highly similar portfolios and share identical fee structures, minor differences in their specific underlying bond selections create a slight divergence in investor payouts. The Schwab fund currently offers a trailing twelve-month distribution yield of 4.9 percent, having paid $1.47 per share on its recent $30.10 share price.
By comparison, the older Vanguard fund yields 4.8 percent over the same trailing twelve-month period. It has distributed $2.52 per share to investors based on its recent share price of approximately $53.05.
When analyzing price volatility relative to the S&P 500, the beta for these funds is calculated from monthly returns over an available history of up to five years. Ultimately, the choice between the two vehicles hinges on a marginal yield advantage versus a longer operational track record.
