Which Long-Term Bond ETF Is the Better Buy: State Street’s SPLB or iShares’ TLT?
One fund lends to companies and pays more. The other lends to the U.S. government and offers more safety. Here is how to choose.
The State Street SPDR Portfolio Long Term Corporate Bond ETF (SPLB) and the iShares 20+ Year Treasury Bond ETF (TLT) are two long-term bond ETFs to consider. SPLB has a lower expense ratio of 0.04% and offers higher dividend yield, while TLT provides access to high-liquidity government debt. SPLB invests in Treasury Bonds with maturities of at least 10 years, spread across 2,971 holdings, while TLT is even more concentrated, holding 49 U.S. Treasury securities.
SPLB has paid $1.31 per share over the past year, yielding 6.3%, compared to TLT's $4.23 per share, or 5.2%, yield. Historically, SPLB has been more resilient during the past five years, making it a better long-term pick for investors seeking bond income. Despite its smaller size, SPLB's lower fees and extra income provide a significant advantage.
For those wanting to avoid default risk, TLT might be the simpler choice; however, for most long-term investors willing to take on some corporate credit risk, SPLB appears to be the better buy.
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