What defines a zero-coupon Treasury ETF like GOVZ or ZROZ?

Zero-coupon Treasury ETFs hold strips of US government debt that do not pay regular interest. Instead, they are bought at a discount and mature at face value. GOVZ and ZROZ both track long-dated Treasuries over 25 years, meaning their value fluctuates significantly with interest rate changes. These funds do not generate cash flow from coupons, so gains or losses depend on the spread between purchase price and final redemption value, adjusted for market yield movements.

Why does long duration matter for funds like GOVZ and ZROZ?

Duration measures sensitivity to interest rate changes. Both GOVZ and ZROZ focus on maturities of 25 years or more, resulting in high duration. This means their net asset values are highly responsive to shifts in the yield curve. When rates fall, these funds typically gain more than shorter-term bond funds. Conversely, rising rates cause larger drawdowns. Investors use this structure for hedging or speculative exposure to long-term rates, rather than for capital preservation.

Are top-10 holdings data available for GOVZ or ZROZ?

Top-10 holdings data are not available for either GOVZ or ZROZ. Without specific holding weights, it is impossible to assess concentration risk or credit quality at the individual security level. The shared top-10 holdings comparison lists none, reflecting this data gap. Investors should rely on the funds’ stated objective of holding long-dated US Treasuries. While US government debt is considered sovereign and low-default risk, the lack of holding visibility limits precise portfolio transparency.

What is the expense ratio difference between GOVZ and ZROZ?

GOVZ has an expense ratio of 0.10%, while ZROZ has 0.15%. The 0.05 percentage point difference means GOVZ charges less annually for fund management. On a hypothetical £1,000 investment, this equates to £0.50 less in fees per year for GOVZ. Over extended periods, this difference compounds slightly in favour of GOVZ. However, fees are just one metric; other factors such as assets under management and dividend yield also influence net outcomes.

How do the dividend yields of GOVZ and ZROZ compare?

ZROZ offers a dividend yield of 5.50%, whereas GOVZ provides 5.44%. This marginal difference of 0.06 percentage points means ZROZ currently generates slightly more income per pound invested. For zero-coupon bond funds, yields reflect the market-implied return to maturity rather than traditional interest payments. Investors should note that higher yield may correlate with lower prices or different market expectations. Yields fluctuate with secondary market prices, so this snapshot is not a guarantee of future distributions.

Do GOVZ and ZROZ distribute income the same way?

Both funds handle distributions, but the underlying mechanism differs. GOVZ and ZROZ primarily gain from the accretion of discount, not coupons. Distributions may represent return of capital or realised gains rather than pure income. ZROZ’s 5.50% yield suggests the market expects a return of this magnitude. Since neither fund lists top holdings or index details, the precise composition driving these distributions remains opaque. Investors should check tax treatment for returns of capital.

Which fund is older, GOVZ or ZROZ?

ZROZ launched in October 2009, providing a significantly longer track record than GOVZ, which started in September 2020. ZROZ has been available through various interest rate cycles, potentially offering a longer history for operational stability. GOVZ is much newer and lacks historical performance data through similar market environments. However, past longevity does not predict future fund management quality or returns. Both remain relevant options for accessing the long end of the US Treasury curve today.

What is the difference in net assets between GOVZ and ZROZ?

ZROZ holds £1.7 billion in net assets, compared to GOVZ's £329 million. Larger assets under management may support better liquidity and tighter bid-ask spreads for ZROZ, potentially making it easier to trade large positions without moving the market price. However, GOVZ’s smaller size does not inherently impair its ability to track the market. Liquidity is also influenced by trading volume and the underlying securities’ availability, though data for ZROZ issuer is not available.

How do interest rate expectations affect GOVZ and ZROZ?

Both GOVZ and ZROZ are sensitive to long-term interest rate expectations. If markets anticipate sustained high rates, the price of these long-dated Treasury funds tends to fall as yields rise above their purchase prices. Conversely, if recession fears drive rates down, these funds often see capital appreciation. Because they focus on 25+ year maturities, they reflect the long end of the yield curve, not immediate central bank policy rates. This makes them useful for portfolio diversification against equity downturns.

Why is the index tracked not available for these ETFs?

For both GOVZ and ZROZ, the specific index tracked is not available. This lack of transparency prevents precise replication verification and makes it difficult to determine if the funds are actively managing duration or simply tracking a passive benchmark. Without knowing the index, investors cannot assess weighting methodologies or rebalancing rules. This is a notable drawback for both funds, particularly for those prioritising strict passive tracking and full disclosure of investment methodology.

What information is missing that prevents a direct comparison?

Key missing data includes issuer names for ZROZ, index details for both funds, top holdings, and sector weights. With none of these factors, a rigorous side-by-side comparison is not possible. Investors must evaluate the two funds based solely on net assets, expense ratios, dividend yields, and inception dates, which are provided. The absence of holdings data means that credit, maturity, and duration weights cannot be compared, leaving the funds looking structurally identical by objective but unknown by composition.

What educational disclaimer applies to comparing GOVZ and ZROZ?

This comparison is for educational purposes only and does not constitute financial advice. Data for GOVZ and ZROZ, including expense ratios, yields, and net assets, is sourced from Yahoo Finance and may change over time. Index and holding details are currently not available for these funds, limiting full transparency. Investors should conduct independent due diligence or consult a qualified professional before making investment decisions, as past performance and current yields do not guarantee future results.

GOVZ vs ZROZ

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

This page compares GOVZ and ZROZ, two long-dated US Treasury ETFs. It examines fees, holdings, dividends, and how each fund tracks the market, using only verified data. GOVZ holds $329 million with a 0.10% expense ratio, while ZROZ holds $1.7 billion with a 0.15% expense ratio. Top holdings and index details are not available. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

GOVZ

Metric

ZROZ

0.10%

Expense Ratio

0.15%

5.44%

Dividend Yield

5.50%

$328.55M

Net Assets

$1.66B

Holdings

Sep 22, 2020

Inception Date

Oct 30, 2009

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Index Tracked

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Long Government

Fund Category

Long Government

GOVZ costs about $5.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

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Investment Analysis

GOVZ

Pros

Low expense ratio of 0.10% helps retain returns.
Diversified across multiple issuers due to zero coupon focus.
Long duration exposure provides interest rate sensitivity.

Considerations

Smaller net assets of $329 million may limit liquidity.
Dividend yield of 5.44% is slightly lower than the alternative.
Index tracked is not available, potentially affecting transparency.

ZROZ

Pros

Larger net assets of $1.7 billion enhance liquidity and stability.
Dividend yield of 5.50% offers marginally higher income.
Longer fund history since inception in 2009 may improve trust.

Considerations

Higher expense ratio of 0.15% reduces net returns.
Index tracked and issuer information is not available, limiting clarity.
Shared top-10 holdings are none, reducing comparative transparency.

About GOVZ and ZROZ

GOVZ (GOVZ)

The iShares 25+ Yr Treasury Strips ETF (GOVZ) offers investors exposure to U.S. Treasury bonds with maturities of 25 years or more. By focusing on long-duration government debt, this fund aims to provide a hedge against economic uncertainty and potential interest rate changes. With a low expense ratio of 0.10%, it is designed for cost-efficient access to the bond market. The fund currently holds 22 securities and has net assets of USD 329 million. It boasts a dividend yield of 5.44%, appealing to those seeking income. However, investors should be aware that values can rise and fall, and past performance does not guarantee future results. This ETF is suitable for those looking to diversify their portfolio with long-term government bonds, understanding the inherent risks of interest rate fluctuations.

ZROZ (ZROZ)

The PIMCO 25+ Year Zero Coupon US Treasury Index ETF (ZROZ) is an exchange-traded fund that invests in a portfolio of US Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) with maturities greater than 25 years. STRIPS are zero-coupon bonds, meaning they do not make regular interest payments. Instead, they are bought at a discount to their face value and mature at par. ZROZ aims to track the performance of long-term US Treasuries, offering exposure to government debt with a very long duration. Because of this extended duration, ZROZ is highly sensitive to changes in interest rates; if rates rise, the fund's price may fall, and vice versa. It is designed for investors seeking potential capital appreciation or a hedge against certain economic scenarios, but it carries significant volatility risks associated with long-term rates. The fund has a low expense ratio and no regular dividend yield due to its zero-coupon nature.

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GOVZ vs ZROZ

Fund Snapshot