TLT vs LQD ETF Comparison: AI Score, Valuation, Performance and Upside
TLT and LQD are both interest rate sensitive but differ in what else they carry. TLT holds only long Treasuries, so its returns are driven purely by long-term rates, and it tends to rally when investors flee to safety. LQD adds corporate credit risk in exchange for a higher yield, which means spreads can widen against it in a recession.
Use this TLT vs LQD comparison to decide what job the bond allocation is doing. If you want an equity hedge, pure long Treasuries have historically performed that role better, because credit spreads widen in the same conditions that hurt equities. If you want yield, corporate bonds pay more, with correlation to equities as the cost.
LQD holds the edge across 1 of 5 key metrics in this comparison. LQD has delivered stronger 1-year price return (-2.71% vs -6.77% for TLT).
- Want a potential equity hedge from pure government duration
- Hold a specific view that long-term interest rates will fall
- Prefer no credit risk in the bond allocation
- Accept very large price swings from rate changes
- Want more yield than comparable Treasuries provide
- Value diversification across many investment grade issuers
- Prefer somewhat less extreme duration than long Treasuries
- Accept credit spread risk that correlates with equity drawdowns
| Metric | TLT | LQD |
|---|---|---|
| ETF scorei | 14.0 | 37.0 |
| Latest closei | $79.32 | $103.21 |
| 1M returni | -4.41% | -2.94% |
| 6M returni | -5.21% | -1.79% |
| 1Y returni | -6.77% | -2.71% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | TLT | LQD |
|---|---|---|
| 1Y ago | $9.76K (-2.4%) started 2025-09-25 | $10.2K (+2.0%) started 2025-09-25 |
| 5Y ago | $7.84K (-21.6%) started 2021-09-27 | $11.66K (+16.6%) started 2021-09-27 |
| 10Y ago | $10.65K (+6.5%) started 2016-09-26 | $18.31K (+83.1%) started 2016-09-26 |
Hypothetical — past performance does not guarantee future results.
| Metric | TLT | LQD |
|---|---|---|
| Expense ratioi | N/A | 0.14% |
| Total assets (AUM)i | N/A | $32.04B |
| Dividend yieldi | N/A | 4.67% |
| Trailing P/Ei | N/A | N/A |
| Betai | N/A | 0.45 |
| 52-week change | -6.77% | -2.71% |
| Metric | TLT | LQD |
|---|---|---|
| 1Y returni | -6.77% | -2.71% |
| 6M returni | -5.21% | -1.79% |
| 1M returni | -4.41% | -2.94% |
| 1Y Sharpe ratio | -1.19 | -1.31 |
| Betai | N/A | 0.45 |
| Dividend yieldi | N/A | 4.67% |
| 5Y CAGR | -8.37% | -1.34% |
Over the past year, TLT and LQD have moved strongly in the same direction (correlation of 0.89), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | TLT | LQD |
|---|---|---|---|
| 1Y | Growthi | -6.77% | -2.71% |
| CAGRi | -6.78% | -2.71% | |
| Volatilityi | 9.35% | 5.44% | |
| Sharpe ratioi | -1.19 | -1.31 | |
| Sortino ratioi | -1.57 | -1.67 | |
| Max drawdowni | 10.32% | 5.12% | |
| Current drawdowni | 10.32% | 5.07% | |
| Avg drawdowni | 4.04% | 1.51% | |
| Ulcer Indexi | 4.63% | 1.84% | |
| Max daily dropi | 1.90% | 1.23% | |
| Max wkly dropi | 2.96% | 1.92% | |
| 5Y | Growthi | -35.36% | -6.52% |
| CAGRi | -8.37% | -1.34% | |
| Volatilityi | 15.69% | 8.67% | |
| Sharpe ratioi | -0.77 | -0.63 | |
| Sortino ratioi | -1.05 | -0.86 | |
| Max drawdowni | 43.70% | 24.54% | |
| Current drawdowni | 38.93% | 6.90% | |
| Avg drawdowni | 30.64% | 10.48% | |
| Ulcer Indexi | 32.06% | 12.03% | |
| Max daily dropi | 3.42% | 2.31% | |
| Max wkly dropi | 6.42% | 4.94% | |
| 10Y | Growthi | -23.40% | +19.64% |
| CAGRi | -2.63% | +1.81% | |
| Volatilityi | 14.82% | 8.70% | |
| Sharpe ratioi | -0.41 | -0.27 | |
| Sortino ratioi | -0.57 | -0.37 | |
| Max drawdowni | 48.35% | 24.95% | |
| Current drawdowni | 43.98% | 7.41% | |
| Avg drawdowni | 22.34% | 6.56% | |
| Ulcer Indexi | 27.28% | 9.05% | |
| Max daily dropi | 6.67% | 5.00% | |
| Max wkly dropi | 7.78% | 13.25% |
| Category | TLT | LQD |
|---|---|---|
| Fund name | iShares 20+ Year Treasury Bond ETF | iShares iBoxx $ Investment Grade Corporate Bond ETF |
| Type | ETF | ETF |
| Expense ratioi | N/A | 0.14% |
| Total assets (AUM)i | N/A | $32.04B |
| Dividend yieldi | N/A | 4.67% |
- No meaningful credit risk, since the holdings are US government obligations
- Historically has risen sharply when rates fall during recessions, offsetting equity losses
- Deep liquidity, widely used for expressing interest rate views
- Higher yield than Treasuries of comparable maturity, compensating for credit risk
- Diversified across many investment grade issuers, limiting single-issuer damage
- Shorter duration than long Treasuries, so less extreme rate sensitivity
- Very long duration means large price declines when long-term rates rise
- Has produced severe drawdowns comparable to equities during rate increases
- Provides no inflation protection, since fixed coupons lose real value
- Credit spreads widen in recessions, so prices can fall exactly when equities do
- Still carries meaningful interest rate risk from intermediate to long maturities
- Investment grade ratings can be downgraded, and some issuers sit near the boundary
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