Treasuries have been enjoying a solid ascent this year on a flight to safety and easing money policies. Particularly, the latest surge came on the back of Fed’s slight hawkish approach and Trump’s new tariff threat.
President Trump announced additional tariffs of 10% on the remaining $300 billion in Chinese goods effective September, which intensified concerns over global growth, which is already witnessing a slowdown. A wave of pessimism surrounding trade news has pushed the U.S. Treasury yields down, raising demand for the safe-haven bonds in turn, especially the long-dated ones. Notably, 10-year yields saw the biggest weekly drop in seven years and fell to their lowest closing level since October 2016 (read: Trump Threatens New Tariff: 5 ETF Buying Zones).
The new tariff has again resulted in speculation that the Fed will cut rates in September to protect the economy from trade risk though the central bank turned slightly hawkish in its latest FOMC meeting by dampening hopes of a string of rate cuts. Added to the favorable trend of the bond market are the global monetary easing trends, wherein central banks are resorting to rates cut or launching fresh stimulus to tackle global growth headwinds.
As such, long-term Treasury bond ETFs have been on the rise this year and the latest surge has pushed most of them to new one-year highs. The trend will likely to continue at least for the near term given trade gyration. Below, we have profiled five ETFs that hit a 52-week high in the latest trading session (see: all Government Bond ETFs here).
PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) : New High - $133.57
This ETF follows the BofA Merrill Lynch Long Treasury Principal STRIPS Index and holds 20 securities in its basket. Effective maturity and effective duration of the fund are 27.37 years each. This fund has a decent level of $275.8 million in AUM while a light average daily volume of 28,000 shares. It charges 15 bps in annual fees and has gained 20.1% so far this year. The ETF has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
Vanguard Extended Duration Treasury ETF (EDV - Free Report) : New High - $132.40
This fund provides exposure to the long-term Treasury STRIPS market by tracking the Bloomberg Barclays U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index. It holds 81 bonds in total with average maturity of 25.1 years and average duration of 24.1 years. Expense ratio comes in at 0.07%. The product has amassed $1.1 billion in its asset base while seeing a moderate volume of 154,000 shares per day on average. It has added 18.2% in the same time frame and carries a Zacks ETF Rank #5 with a High risk outlook (read: Grab These Safe Haven ETFs Amid Intensifying Trade Spat).
iShares 20+ Year Treasury Bond ETF (TLT - Free Report) : New High - $136.51
This is the most popular and liquid ETF in the long-dated bond space with AUM of $14.5 billion and average daily volume of 8.5 million shares. It tracks the ICE U.S. Treasury 20+ Year Bond Index, holding 36 securities in its basket. The fund has average maturity of 25.41 years and effective duration of 17.83 years. It charges 15 bps in fees per year and has gained 14% in the same time frame. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Vanguard Long-Term Government Bond ETF (VGLT - Free Report) : New High - $83.76
With AUM of $1.2 billion, this fund follows the Bloomberg Barclays U.S. Long Government Float Adjusted Index. It holds 51 bonds in its basket with average maturity of 25.4 years and average duration of 17.5 years. The ETF trades in a good volume of around 248,000 shares and has 0.07% expense ratio. The product is up 13.8% so far this year and has a Zacks ETF Rank #5 with a High risk outlook.
SPDR Portfolio Long-Term Treasury ETF (SPTL - Free Report) : New High - $32.22
This fund tracks the Bloomberg Barclays Long U.S. Treasury Index, charging investors 6 bps in annual fees. It holds 57 bonds in its basket with average maturity of 25 years and an adjusted duration of 18.00 years. SPTL is one of the popular choices in the long-term Treasury space with AUM of $2.5 billion and average daily volume of 881,000 shares. SPTL has risen 13.7% so far this year and has a Zacks ETF Rank #3 (read: Global Easing Policies Push Treasury ETFs Higher).
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