What do TLT and ZROZ primarily invest in, and how do their structures differ?

Both TLT and ZROZ invest in long-term US government bonds, specifically focusing on maturities of 20+ years for TLT and 25+ years for ZROZ. The primary structural difference lies in the bond types: TLT holds conventional interest-bearing Treasuries, while ZROZ focuses on zero-coupon Treasuries. Zero-coupon bonds are issued at a discount and do not pay periodic interest; instead, their value grows as they approach maturity. This structure makes ZROZ highly sensitive to interest rate changes, resulting in potentially greater price volatility compared to TLT.

Why do TLT and ZROZ have similar expense ratios despite different strategies?

TLT and ZROZ both charge an expense ratio of 0.15%. These low fees reflect the nature of passively managed bond index funds, which track specific bond indices rather than relying on active trading decisions. Although ZROZ employs a more specialised zero-coupon strategy and TLT uses a broader 20+ year benchmark, the operational costs of holding and rebalancing government bonds remain similar. Consequently, the annual cost to investors is identical, meaning the fee difference does not drive performance divergence; instead, structural differences and index composition are the primary determinants of their respective returns.

Are the underlying index methodologies for TLT and ZROZ fully transparent?

Transparency regarding the specific index methodologies for both TLT and ZROZ is currently limited based on available data. While TLT is issued by iShares and ZROZ by PIMCO, detailed index tracking specifications are marked as 'not available' in the current dataset. Without access to the exact inclusion rules, weighting schemes, or rebalancing frequencies, investors must rely on the fund names and general strategy descriptions (20+ year versus 25+ year zero-coupon) to infer their composition. This lack of granular methodological detail can make precise performance benchmarking more challenging for investors seeking to understand the exact drivers of returns.

How do the dividend yields of TLT and ZROZ compare, and what drives the difference?

ZROZ offers a higher dividend yield of 5.50% compared to TLT's 4.76%. This 0.74 percentage point difference stems from their differing bond structures. TLT holds conventional bonds that pay regular interest coupons, resulting in a steady, lower yield. In contrast, ZROZ holds zero-coupon bonds, which do not pay periodic interest. However, these funds may still distribute capital gains or interest from tax-exempt structures or accrued interest adjustments. The higher yield in ZROZ generally reflects compensation for its higher interest rate sensitivity and lack of regular cash flow, offering greater theoretical income potential alongside increased risk.

What are the implications of TLT and ZROZ not having top-10 holdings data?

The absence of top-10 holdings data for both TLT and ZROZ obscures the precise composition of their portfolios. Typically, top holdings reveal concentration risks and specific bond characteristics, such as maturity dates or issue dates. Without this transparency, investors cannot verify how concentrated or diversified the funds are at the security level, nor can they confirm the exact weighting of specific Treasury notes. This limitation hinders the ability to assess potential idiosyncratic risks within the funds and makes direct portfolio-level comparison between the two ETFs difficult based on available public data.

Is there any overlap between the top holdings of TLT and ZROZ?

There are no shared top-10 holdings between TLT and ZROZ. This lack of overlap is logical given their distinct investment mandates. TLT targets 20+ year conventional Treasury bonds, which pay regular interest. ZROZ targets 25+ year zero-coupon Treasury STRIPS, which have a different structure and often represent separate, specifically created securities. Since the securities themselves are fundamentally different instruments, and their maturity buckets vary slightly, there is no direct commonality in the top holdings. This reinforces their divergent roles within a bond portfolio, particularly regarding cash flow and interest rate sensitivity profiles.

Which fund is better suited for investors prioritising income versus price stability?

TLT is generally more aligned with investors prioritising steady, predictable income and lower volatility relative to ZROZ. TLT's conventional bonds provide regular interest payments, resulting in a more stable cash flow stream, although at a slightly lower yield of 4.76%. ZROZ, with its higher yield of 5.50%, offers greater potential for income accumulation through its zero-coupon structure's price appreciation, but it exhibits extreme sensitivity to interest rate changes. Investors seeking less erratic price movements may lean towards TLT, whereas those focusing on potential yield enhancement from long-duration exposure may look at ZROZ, accepting higher volatility.

How do the net assets of TLT and ZROZ differ, and why does it matter?

TLT possesses significantly higher net assets of $46.7 billion compared to ZROZ's $1.7 billion. This substantial difference in fund size impacts liquidity and trading costs. TLT's massive asset base typically correlates with high trading volumes, resulting in tighter bid-ask spreads and easier execution of large orders. ZROZ's smaller size may lead to wider bid-ask spreads, increasing transaction costs for active traders. While ZROZ's smaller asset base minimises the risk of fund-induced market impact on underlying bonds, TLT's scale offers the advantage of market efficiency and accessibility for a broader range of investors.

Do the differing inception dates of TLT and ZROZ affect their long-term performance data?

Yes, the inception dates create different historical data contexts. TLT was launched on 22 July 2002, providing over 24 years of performance history through 2026. This long track record covers various interest rate cycles, including periods of falling rates and the sharp rise starting in 2022. ZROZ, launched on 30 October 2009, offers a shorter history of approximately 17 years, missing the 2002–2009 period but capturing the low-rate era and subsequent tightening. Consequently, TLT provides more robust historical data for backtesting across different economic regimes, while ZROZ's performance record is restricted to a more recent, albeit volatile, environment.

What practical considerations should investors weigh when comparing TLT and ZROZ?

Investors should weigh liquidity needs, transaction costs, and risk tolerance. TLT, with its $46.7 billion asset base and higher trading volume, generally offers tighter spreads, making it more practical for large or frequent trades. ZROZ's smaller size may incur higher hidden trading costs due to wider spreads. Additionally, ZROZ's zero-coupon nature creates 'phantom income' tax complexities in some jurisdictions, as investors may owe taxes on accrued interest despite no cash distributions. TLT provides regular cash payments for tax liabilities. The choice depends on whether an investor prioritises liquidity and simplicity (TLT) or potentially higher long-term yield with extreme duration risk (ZROZ).

Where can investors find detailed expense ratio information for these ETFs?

According to the provided data, the expense ratios for both TLT and ZROZ are clearly stated at 0.15%. However, detailed fee structures beyond this headline number, such as trading costs, management expense limits, or specific transaction fees, are not explicitly broken down in the available dataset. Investors should consult the official issuer websites for iShares (for TLT) and PIMCO (for ZROZ) to obtain comprehensive fee schedules. While the provided ground truth confirms the management fee percentage, total costs of ownership might vary based on trading frequency and market conditions, which are not detailed in these basic comparison figures.

Why might a financial advisor recommend checking sector weights for these funds?

While both TLT and ZROZ fall under the 'Long Government' category, the provided data shows that sector weights are 'not available'. An advisor might request this information to assess the precise concentration within the government bond sector. Since both are 100% government bonds, the sector weight data is less critical than the maturity or sub-sector breakdowns (e.g., Treasuries vs. Agencies). However, knowing the unavailable sector weights limits the ability to confirm if any non-government debt has been inadvertently included. Investors should seek full prospectuses to verify the exact allocation percentages and ensure the portfolios strictly align with pure long-duration government exposure.

TLT vs ZROZ

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

Compare TLT (iShares 20+ Year Treasury Bond ETF) and ZROZ (PIMCO 25+ Year Zero Coupon US Treasury Index ETF). This page examines fees, holdings, dividends and how each fund tracks its market to help you understand their differences in the long government bond category. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

TLT

Metric

ZROZ

0.15%

Expense Ratio

0.15%

4.76%

Dividend Yield

5.50%

$46.71B

Net Assets

$1.66B

Holdings

Jul 22, 2002

Inception Date

Oct 30, 2009

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Index Tracked

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Long Government

Fund Category

Long Government

Both funds charge the same annual fee.

Shared Top Holdings

These funds do not share any of their top holdings.

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Investment Analysis

TLT

Pros

Massive asset base enhances market liquidity and tight bid-ask spreads
Extensive track record since inception provides substantial historical data
High trading volume facilitates easier large-position execution

Considerations

Specific index methodology remains unavailable for transparency assessment
Top holdings data is missing, obscuring portfolio composition details
Dividend yield lags Fund B despite similar expense ratios

ZROZ

Pros

Higher dividend yield offers greater income potential for investors
Zero-coupon focus targets long-duration exposure for yield enhancement
Lower asset base reduces potential for size-driven market impact

Considerations

Smaller fund size may result in wider bid-ask spreads and liquidity risks
Issuer information is unavailable, reducing transparency on fund management
Index tracking details are missing, hindering performance benchmarking

About TLT and ZROZ

TLT (TLT)

The iShares 20+ Year Treasury Bond ETF (TLT) offers investors exposure to U.S. government bonds with maturities of 20 years or longer. As a long-term government bond fund, it is often influenced significantly by interest rate changes and economic outlooks. When interest rates fall, bond prices generally rise, and vice versa. With a modest expense ratio of 0.15% and net assets of USD 46.71 billion, it is a widely traded vehicle for those looking to diversify beyond equities. The fund holds 49 underlying assets and has an inception date of July 2002. It currently provides a dividend yield of approximately 4.76%. Investors should note that the value of this fund can fluctuate due to changes in long-term interest rates and inflation expectations, meaning returns are not guaranteed. It suits those seeking potential income or diversification, though it carries risks related to interest rate sensitivity.

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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TLT vs ZROZ

Fund Snapshot