The iShares 20+ Year Treasury Bond ETF (TLT) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. TLT is a iShares Long Government fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between TLT and BIV? And which fund is better?
The expense ratio of TLT is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%). TLT is mostly comprised of AAA bonds and BIV has a high exposure to AAA bond. Overall, TLT has provided higher returns than BIV over the past 11 years.
In this article, we’ll compare TLT vs. BIV. We’ll look at fund composition and industry exposure, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss TLT’s and BIV’s performance, holdings, and portfolio growth and examine how these affect their overall returns.
Summary
| TLT | BIV | |
| Name | iShares 20+ Year Treasury Bond ETF | Vanguard Intermediate-Term Bond Index Fund ETF Shares |
| Category | Long Government | Intermediate-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 15.15B | 39.05B |
| Avg. Return | 9.00% | 5.31% |
| Div. Yield | 1.5% | 2.06% |
| Expense Ratio | 0.15% | 0.05% |
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%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
TLT’s dividend yield is 0.56% lower than that of BIV (1.5% vs. 2.06%). Also, TLT yielded on average 3.68% more per year over the past decade (9.00% vs. 5.31%). The expense ratio of TLT is 0.10 percentage points higher than BIV’s (0.15% vs. 0.05%).
Fund Composition
Holdings
| 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.
| BIV Bond Sectors | Weight |
| AAA | 54.51% |
| BBB | 25.24% |
| A | 16.97% |
| AA | 3.1% |
| Others | 0.15% |
| Below B | 0.03% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| TLT | BIV | |
| Mean Return | 0.63 | 0.35 |
| R-squared | 68.76 | 95.12 |
| Std. Deviation | 12.76 | 4.09 |
| Alpha | -2.83 | -0.07 |
| Beta | 3.54 | 1.33 |
| Sharpe Ratio | 0.55 | 0.89 |
| Treynor Ratio | 1.82 | 2.72 |
The iShares 20+ Year Treasury Bond ETF (TLT) has a Sharpe Ratio of 0.55 with a Beta of 3.54 and a Standard Deviation of 12.76. Its Alpha is -2.83 while TLT’s Mean Return is 0.63. Furthermore, the fund has a Treynor Ratio of 1.82 and a R-squared of 68.76.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Alpha of -0.07 with a R-squared of 95.12 and a Mean Return of 0.35. Its Treynor Ratio is 2.72 while BIV’s Standard Deviation is 4.09. Furthermore, the fund has a Beta of 1.33 and a Sharpe Ratio of 0.89.
TLT’s Mean Return is 0.28 points higher than that of BIV and its R-squared is 26.36 points lower. With a Standard Deviation of 12.76, TLT is slightly more volatile than BIV. The Alpha and Beta of TLT are 2.76 points lower and 2.21 points higher than BIV’s Alpha and Beta.
Performance
Annual Returns
| Year | TLT | BIV |
| 2020 | 17.92% | 9.71% |
| 2019 | 14.93% | 10.19% |
| 2018 | -2.07% | -0.09% |
| 2017 | 8.92% | 3.8% |
| 2016 | 1.36% | 2.86% |
| 2015 | -1.65% | 1.23% |
| 2014 | 27.35% | 7.0% |
| 2013 | -13.91% | -3.44% |
| 2012 | 3.25% | 7.02% |
| 2011 | 33.6% | 10.62% |
| 2010 | 9.25% | 9.55% |
TLT had its best year in 2011 with an annual return of 33.6%. TLT’s worst year over the past decade yielded -13.91% and occurred in 2013. In most years the iShares 20+ Year Treasury Bond ETF provided moderate returns such as in 2012, 2017, and 2010 where annual returns amounted to 3.25%, 8.92%, and 9.25% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| TLT | $10,000 | $23,809 | 9.00% |
| BIV | $10,000 | $17,492 | 5.31% |
A $10,000 investment in TLT would have resulted in a final balance of $23,809. This is a profit of $13,809 over 11 years and amounts to a compound annual growth rate (CAGR) of 9.00%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
TLT’s CAGR is 3.68 percentage points higher than that of BIV and as a result, would have yielded $6,317 more on a $10,000 investment. Thus, TLT outperformed BIV by 3.68% annually.
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