The iShares Gold Trust (IAU) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. IAU is a iShares N/A fund and TLT is a iShares Long Government fund. So, what’s the difference between IAU and TLT? And which fund is better?
The expense ratio of IAU is 0.10 percentage points higher than TLT’s (0.25% vs. 0.15%). IAU also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, IAU has provided lower returns than TLT over the past 11 years.
In this article, we’ll compare IAU vs. TLT. We’ll look at annual returns and risk metrics, as well as at their fund composition and performance. Moreover, I’ll also discuss IAU’s and TLT’s portfolio growth, industry exposure, and holdings and examine how these affect their overall returns.
Summary
| IAU | TLT | |
| Name | iShares Gold Trust | iShares 20+ Year Treasury Bond ETF |
| Category | N/A | Long Government |
| Issuer | iShares | iShares |
| AUM | 28.61B | 15.15B |
| Avg. Return | 6.03% | 9.00% |
| Div. Yield | 0.0% | 1.5% |
| Expense Ratio | 0.25% | 0.15% |
The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
The iShares 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
IAU’s dividend yield is 1.50% lower than that of TLT (0.0% vs. 1.5%). Also, IAU yielded on average 2.96% less per year over the past decade (6.03% vs. 9.00%). The expense ratio of IAU is 0.10 percentage points higher than TLT’s (0.25% vs. 0.15%).
Fund Composition
Holdings
| IAU Holdings | Weight |
| Gold | 100.0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
| N/A | 0% |
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
| TLT Bond Sectors | Weight |
| AAA | 100.0% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
TLT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IAU | TLT | |
| Mean Return | 0.23 | 0.63 |
| R-squared | 16.03 | 68.76 |
| Std. Deviation | 16.97 | 12.76 |
| Alpha | 4.16 | -2.83 |
| Beta | 0.48 | 3.54 |
| Sharpe Ratio | 0.13 | 0.55 |
| Treynor Ratio | 1.5 | 1.82 |
The iShares Gold Trust (IAU) has a Beta of 0.48 with a Standard Deviation of 16.97 and a Treynor Ratio of 1.5. Its Alpha is 4.16 while IAU’s R-squared is 16.03. Furthermore, the fund has a Sharpe Ratio of 0.13 and a Mean Return of 0.23.
The iShares 20+ Year Treasury Bond ETF (TLT) has a Mean Return of 0.63 with a Sharpe Ratio of 0.55 and a Standard Deviation of 12.76. Its Treynor Ratio is 1.82 while TLT’s Alpha is -2.83. Furthermore, the fund has a R-squared of 68.76 and a Beta of 3.54.
IAU’s Mean Return is 0.40 points lower than that of TLT and its R-squared is 52.73 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than TLT. The Alpha and Beta of IAU are 6.99 points higher and 3.06 points lower than TLT’s Alpha and Beta.
Performance
Annual Returns
| Year | IAU | TLT |
| 2020 | 23.86% | 17.92% |
| 2019 | 18.54% | 14.93% |
| 2018 | -1.39% | -2.07% |
| 2017 | 11.58% | 8.92% |
| 2016 | 8.85% | 1.36% |
| 2015 | -11.65% | -1.65% |
| 2014 | -0.44% | 27.35% |
| 2013 | -27.96% | -13.91% |
| 2012 | 8.37% | 3.25% |
| 2011 | 8.66% | 33.6% |
| 2010 | 27.93% | 9.25% |
IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.
The year 2011 was the strongest year for TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IAU | $10,000 | $16,786 | 6.03% |
| TLT | $10,000 | $23,809 | 9.00% |
A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.
With a $10,000 investment in TLT, the end total would have been $23,809. This equates to a $13,809 profit over 11 years and a compound annual growth rate (CAGR) of 9.00%.
IAU’s CAGR is 2.96 percentage points lower than that of TLT and as a result, would have yielded $7,023 less on a $10,000 investment. Thus, IAU performed worse than TLT by 2.96% annually.
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