That is good news for ZROZ, an ETF with an effective duration almost 27.4 years, according to PIMCO data. Duration measures a bond’s sensitivity to interest rate changes with longer-dated bonds being more vulnerable to interest increases than shorter-dated fare.
All of the 21 holdings found in ZROZ are U.S. government issues and all have maturities north of 20 years. The passively managed ETF tracks the BofA Merrill Lynch Long US Treasury Principal STRIPS Index, meaning ZROZ clearly focuses on the long end of the yield curve while employing equal par weighting.
ZROZ has a 30-day SEC yield of 2.9% and charges 0.15% per year.
PIMCO 25+ Year Zero Coupon US Treasury
ETF Trends editorial team contributed to this post.