Bonds should be an essential part of a well-balanced portfolio. Factual differences between the Schwab Long-Term U.S. Treasury ETF (NYSEMKT:SCHQ) and the State Street SPDR Portfolio Long Term Corporate Bond ETF (NYSEMKT:SPLB) center on credit quality, as the Schwab fund tracks government debt while the State Street fund targets investment-grade corporate bonds.
Investors seeking exposure to long-dated fixed income typically choose between government-backed securities and corporate credit. While both funds focus on maturities exceeding 10 years, they offer significantly different risk-reward profiles based on their underlying debt issuers and the credit risk investors are willing to accept for higher income.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the end of trading on Sept. 10, 2026.
The Schwab fund is slightly more affordable with a 0.03% expense ratio compared to 0.04% for the SPDR fund. However, those seeking income may find the higher 5.7% yield of the corporate-focused portfolio more attractive.
Performance & risk comparison
What’s inside
The Schwab Long-Term U.S. Treasury ETF is a fixed-income fund that provides exposure to the long-duration segment of the U.S. Treasury bond market. It currently holds 102 positions, focusing on government debt with maturities that often exceed 20 years. Because it holds government-backed securities, its credit risk is generally lower than corporate bond alternatives. Its largest positions include a highly diversified selection of Treasuries where no single position is a sizable portion of the portfolio. The fund was launched in 2019. Schwab Long-Term U.S. Treasury ETF has paid $1.47 per share over the trailing 12 months, which on its recent ~$29.44 share price works out to a 5% yield.
The State Street SPDR Portfolio Long Term Corporate Bond ETF tracks the Bloomberg U.S. Long Term Corporate Bond Index and holds 2,950 positions. It invests in U.S. dollar-denominated, fixed-rate, investment-grade corporate bonds with maturities of at least 10 years. This fund offers higher income potential by taking on the credit risk associated with private corporations. Its largest positions include a highly diversified array of corporate issues, with no single position exceeding 0.35% of the portfolio. The fund was launched in 2009. State Street SPDR Portfolio Long Term Corporate Bond ETF has paid $1.20 per share over the trailing 12 months, which on its recent ~$21.03 share price works out to a 5.7% yield.
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Which looks like the better buy?
Bonds offer much-valued diversification and a historic low correlation with stocks. These two funds are good options from well-regarded fund managers for those seeking bond ETFs.
But they have crucial differences. SCHQ, the Schwab U.S. Treasury focused fund, offers the best downside protection. That’s because Treasuries are (still) considered the safest investment in the world, given that the federal government has never defaulted on a payment. However, with rising interest rates, that typically causes the price of existing Treasuries to go lower, since the price has to be lower to increase the effective yield on the bonds to market levels. The annual turnover of SCHQ is around 20%, which means there is some exposure to market forces, though already purchased bonds that are held don’t lose their value, although the yield from them may be lower than yields from newly issued Treasuries.
The past decade hasn’t been a great one for the Treasury fund. SCHQ has posted a negative 4.2% annual return since inception in 2019, with a five-year loss of 6.9% and a positive three-year return of just 0.1%.
SPLB, the SPDR corporate bond fund, invests in high-quality bonds of brand name businesses. Its largest holdings include bonds from Anheuser-Busch InBev (NYSE:BUD), CVS Health Corp (NYSE:CVS), and Meta Platforms (NASDAQ:META). These and other holdings are quite reliable in the bond market, as seen in SPLB’s lesser maximum drawdown compared to SCHQ. It also means the fund provides a higher yield, since corporate bonds must compensate investors for their inherently greater risk.
SPLB has returned 1.4% annualized over the past ten years, negative 3.3% over the most recent five years, and 3.7% over the past three years.
Performance-wise, SPLB is the way to go, although it is worth noting that historically in times of extreme world market distress, Treasuries have been the safe haven of choice for global investors. There is no guarantee that this will be the case in the future, given the state of America’s debt level and diminished global standing. But that has been said before and hasn’t come true in the past. The safe-haven potential is something investors should give some weight to.
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Schwab Treasury ETF vs SPDR Corporate Bond ETF. Which Bond Fund Is the Better Insurance Policy for Your Portfolio? was originally published by The Motley Fool
