TLT’s “investment goal is to track the price and yield performance of its benchmark inded, the ICE U.S. Treasury 20+ Year Bond Index. The index seeks to measure the performance of U.S. Treasury public debt obligations, with a remaining maturity greater than 20 years. The Fed’s move to keep interest rates stagnant during the first half of 2016 caused the fund to generate a year-to-date (YTD) return of 16.03% as of June 30, 2016. If interest rate policies remain in their current state, TLT should benefit,” according to Investopedia.
TLT has been a popular Treasury bond play for yield generation over the past few years after the Federal Reserve implemented near-zero interest rates and a robust bond purchasing program. However, TLT comes with a 17.72 year duration – a 1% increase in interest rates would translate to about a 17.72% decline in the fund’s price.
For more information on the fixed-income market, visit our bond ETFs category.
iShares 20+ Year Treasury Bond ETF
Tom Lydon’s clients own shares of TLT.