TLT vs IEF Comparison | Long-Term vs Intermediate U.S. Treasury Bond ETF
TLT (20+ year long-term Treasuries) and IEF (7–10 year intermediate Treasuries) are both flagship iShares U.S. Treasury ETFs. TLT has a duration of ~17 years, offering higher return potential but greater volatility due to interest rate sensitivity. IEF, with a duration of ~7 years, suits investors seeking stable intermediate-term bond exposure. TLT benefits more during rate cuts, while IEF is preferred in periods of rate uncertainty.
Key Differences
- 1TLT has a duration of ~17 years (long-term) vs. IEF at ~7 years (intermediate), making TLT about 2.5x more rate-sensitive
- 2A 1% rate drop boosts TLT by ~17% vs. IEF by ~7%
- 3TLT annual volatility is ~15–20% vs. IEF at ~7–10%, more than double
- 4Both charge 0.15% expense ratio and are managed by BlackRock iShares
- 5In rising rate environments, TLT losses are 2x+ larger than IEF, so rate conviction matters
Conclusion
Choose TLT if you expect rate cuts or need a recession hedge. Choose IEF if you want stable income with lower volatility. The optimal choice depends on your investment horizon and interest rate outlook.
| Category | TLT | IEF |
|---|---|---|
| Fund Name | iShares 20+ Year Treasury Bond ETF | iShares 7-10 Year Treasury Bond ETF |
| Current Price | ... | ... |
| Category | Bonds & Commodities | Bonds & Commodities |
| Expense Ratio | 0.15% | 0.15% |
| Dividend Yield | 3.31% | 3.03% |
| Holdings | 50 | 11 |
TLT Top Holdings
- 1. U.S. 30-Year Treasury Bonds
- 2. U.S. 20-Year Treasury Bonds
IEF Top Holdings
- 1. U.S. 7-Year Treasury Bonds
- 2. U.S. 10-Year Treasury Bonds
TLT Features
- •Long-term government bonds
- •Interest rate sensitive
- •Safe-haven asset
- •Hedging tool
IEF Features
- •Intermediate-term government bonds
- •Moderate duration
- •Stability
- •Liquidity
Pros & Cons
TLT
Advantages
- ✓ Rises when equities fall
- ✓ Safe-haven asset
- ✓ Excellent liquidity
Disadvantages
- ⚠ Rising interest rate risk
- ⚠ Inflation risk
- ⚠ High duration
IEF
Advantages
- ✓ Balanced risk
- ✓ Stable returns
- ✓ Lower volatility than TLT
Disadvantages
- ⚠ Interest rate risk
- ⚠ Inflation risk
- ⚠ Low returns
Investment Strategy
Best For: TLT
For risk hedging; bet on falling rates; 10-20% of total portfolio
Best For: IEF
Core bond position; build a stable portfolio
Detailed Analysis
TLT and IEF both invest in U.S. Treasuries but exhibit entirely different characteristics due to their maturity ranges. TLT invests in bonds with 20+ years remaining maturity, giving it a duration of roughly 17 years — meaning a 1 percentage point change in rates moves its price by about 17%. IEF targets the 7–10 year maturity range with a duration of ~7 years, experiencing about 7% price movement for the same rate change. During the 2022–2023 rate hiking cycle, TLT fell approximately 50% from its peak, starkly demonstrating bond investment risk. IEF declined about 20% over the same period, showing comparatively defensive behavior. Conversely, when rates reverse course, TLT rebounds far more dramatically. On the yield side, TLT generally offers 0.3–0.5 percentage points higher distribution yield than IEF, reflecting long-term rates. However, during yield curve inversions, IEF can actually deliver higher income — as seen during 2024–2025 when intermediate Treasuries offered better yields than long-term bonds. Their portfolio roles also differ. TLT has a lower correlation with equities (especially during crises), providing powerful diversification and significant price appreciation during "flight to safety" events. IEF adds stability to an equity portfolio while avoiding excessive interest rate risk.
Investment Recommendation
TLT is advantageous when rate cutting cycles have begun or recession hedging is needed. TLT acts as leverage on falling rates, significantly reducing total portfolio losses during equity downturns. However, concentrating in TLT during periods of rate uncertainty can lead to substantial losses. IEF is a choice faithful to the principle that bonds should provide stability. It offers moderate rate sensitivity without excessive volatility, making it ideal for bond investment beginners and conservative investors. Placing IEF in the bond allocation of a 60/40 portfolio (60% equities, 40% bonds) enables stable portfolio management. An advanced strategy involves blending TLT and IEF in a "barbell approach." For example, allocating 50% of bond exposure to TLT and 50% to IEF captures TLT's upside during rate declines while IEF provides stability. Tactical allocation adjustments based on rate outlooks can further enhance this approach.
Key Summary
Neither TLT nor IEF is universally superior. The key insight is that the optimal ETF depends on your rate outlook, risk tolerance, and investment horizon. Choose TLT if you are confident in rate cuts and can handle volatility; choose IEF for stable income and lower volatility. Blending both ETFs to simultaneously manage rate risk and opportunity is the wisest approach.
TLT vs IEF Investment Guide
Both TLT and IEF are popular US ETFs, but they differ in investment strategy and portfolio role. TLT has an expense ratio of 0.15%, while IEF charges 0.15%, Both ETFs share the same cost structure. In terms of dividend yield, TLT offers 3.31% while IEF offers 3.03%, making TLT the better choice for income investors.
When choosing between the two, consider your investment goals, time horizon, and risk tolerance. If long-term growth is your priority, favor the ETF with lower fees and broader diversification. If you need steady cash flow, the higher-yielding ETF may be more suitable. You can also hold both in your portfolio for a complementary approach.
Regardless of which ETF you choose, maintaining your target allocation through regular rebalancing is key to long-term performance. Review your portfolio quarterly or semi-annually, and adjust if weights have drifted significantly. Our rebalancing calculator can automatically determine the buy/sell quantities for each holding.
5 Things to Check When Comparing ETFs
Expense Ratio: Even a 0.1% difference in fees can translate to thousands of dollars over long-term investing. When two ETFs track a similar index, the lower-cost option has the edge.
Tracking Index & Holdings: Even ETFs in the same category may track different indices. Review the top holdings and sector weights to find the best fit for your investment goals.
Dividend Policy: Compare dividend frequency (monthly vs quarterly), yield, and dividend growth rate. Monthly dividend ETFs may be preferable if you need regular cash flow.
Trading Volume & Liquidity: Sufficient daily trading volume ensures you can buy and sell at fair prices. Low-volume ETFs may have wider bid-ask spreads, increasing your trading costs.
Portfolio Role: Determine whether the ETF serves as a core or satellite holding in your portfolio, and size your position accordingly.