Key Points
SCHQ is far cheaper to hold than TLT and currently offers a slightly higher yield.
SCHQ has held up better over the past year and through five-year drawdowns, with less severe losses.
Both ETFs focus on long-duration U.S. Treasuries, but SCHQ holds more bonds and shows lower volatility.
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Schwab Long-Term U.S. Treasury ETF (NYSEMKT:SCHQ) stands out for its ultra-low expense ratio and gentler drawdowns compared to iShares 20 Year Treasury Bond ETF (NASDAQ:TLT), though both target long-dated U.S. government debt and deliver similar income profiles.
Both SCHQ and TLT aim to give investors exposure to the long end of the U.S. Treasury market, appealing to those seeking interest rate sensitivity or portfolio ballast. This comparison highlights where their approaches align and diverge on cost, performance, risk, and portfolio construction.
Snapshot (cost & size)
| Metric | TLT | SCHQ |
|---|---|---|
| Issuer | IShares | Schwab |
| Expense ratio | 0.15% | 0.03% |
| 1-yr return (as of 2026-01-30) | -1.4% | -0.4% |
| Dividend yield | 4.4% | 4.6% |
| Beta | 2.34 | 0.52 |
| AUM | $45.2 billion | $902.5 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-year return represents total return over the trailing 12 months.
SCHQ is substantially more affordable to own, with an expense ratio one-fifth that of TLT, and it pays a slightly higher yield. This cost advantage could appeal to long-term holders looking to maximize net returns.
Performance & risk comparison
| Metric | TLT | SCHQ |
|---|---|---|
| Max drawdown (5 y) | -43.70% | -40.88% |
| Growth of $1,000 over 5 years | $573 | $599 |
What's inside
SCHQ tracks the long-term U.S. Treasury bond market with a portfolio of 98 holdings, making it somewhat more diversified than many of its peers. The fund is about 6.3 years old, with 100% of its securities in U.S. government bonds and agency bonds. The portfolio is 99% invested in bonds with just 0.5% in cash. There are no leverage, currency hedge, or ESG quirks to note, and the next ex-dividend date is Feb. 2, 2026.
TLT focuses exclusively on U.S. Treasury bonds with maturities greater than 20 years, holding 45 positions. Its top holdings are Treasury Bond Aug. 15, 2051, Treasury Bond Nov. 15, 2051, and Treasury Bond Aug. 15, 2053, representing a pure play on long-term government debt. Both funds avoid corporate or non-Treasury exposure, but TLT’s smaller number of holdings results in greater concentration in specific bond issues.
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What this means for investors
An investor who held these treasury ETFs over the last five years would currently be underwater. By several key measures, SCHQ looks like the better pick. It has a five-year history of better performance and lower volatility than TLT, achieved with a lower expense ratio and more diversified holdings.
Following two Federal Reserve rate cuts in the fourth quarter of 2026, interest rates could continue to decline. This implies higher demand for bonds, as investors look to lock in higher yields today.
SCHQ and TLT are both solid bond funds, but TLT’s focus on longer-duration bonds maturing in 20-plus years means it could be more sensitive to interest rate swings. By contrast, SCHQ focuses on bonds maturing in 10-plus years. While there are several things to like about SCHQ, TLT could outperform it if interest rates decline from here.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
