Best ETFs For Trading: Long-Term Bonds

ETFS

Just a handful of long-term bond funds are cheap to own for a brief interval.

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If you want to make a bet on declining interest rates, shares in a fund that owns long-term bonds are a good option. This table ranks exchange-traded long-term bond funds on their three-month holding costs.

The obvious choice is the iShares 20+ Year Treasury Bond Fund (TLT). The fund’s portfolio has an average maturity of 26 years and makes a big move up or down in value when rates go, respectively, down or up. We calculate that holding TLT for three months will cost you $4.66 per $10,000 invested.

3-month Holding Cost*
Liquidity Score
Ticker Exchange-traded fund
Diversified and corporate
CLY iShares 10+ Year Credit Bond $5.67 B
SPLB SPDR Portfolio Long Term Corp Bd 6.54 B
VCLT Vanguard Long-Term Corporate Bd 6.96 B
Government
TLT iShares 20+ Year Treasury Bond 4.66 A+
SPTL SPDR Portfolio Long Term Treasury 5.99 B
TLH iShares 10-20 Year Treasury Bond 6.95 B
BLV Vanguard Long-Term Bond 8.14 B
EDV Vanguard Extended Duration Trs 9.16 B
VGLT Vanguard Long-Term Treasury 9.83 B

*Cost of a $10,000 position held for three months. Reflects bid/ask spread, expense ratio and cost offset from securities lending.

Data sources: Morningstar, Bloomberg, fund distributors

TLT’s strong showing here reflects, in part, a high trading volume that keeps the bid/ask spread tight. But, with an expense ratio of 0.15% annually, TLT is less compelling as a long-term investment. In the ranking of long-term bond ETFs for ten-year holding costs, SPDR Portfolio Long Term Treasury (SPTL) beats TLT by a mile. See Best ETFs: Long-Term Bonds.

For links to the three-month rankings in other categories, see Best ETFs for Trading.

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