iShares 10-20 Year Treasury Bond ETF

TLH

Market cap $11.8B

I use iShares 10-20 Year Treasury Bond ETF (TLH) to illustrate a modest bull case for intermediate-term U.S. Treasuries over the next few years. TLH offers a 4.5% yield and historically low correlation with equities, though recent years have seen correlations rise, reducing diversification benefits. My quantitative backtest shows that buying bonds when real yields are above their five-year average historically delivers superior 36-month forward returns.

Historically, major geopolitical or economic crises, such as the war against Iran, have prompted investors to sell riskier assets and buy “safe-haven” investments whose values were expected to remain stable or even rise amid the disruptions. The most popular safe havens have been the US dollar, gold, and longer-term US Treasury obligations.

The iShares 10–20 Year Treasury Bond ETF faces heightened 2026 risks tied to Fed leadership and policy direction. Despite rate cuts in 2025, long-term yields barely declined, highlighting the duration risk embedded in TLH's long-maturity exposure. Potential Fed leadership changes—particularly under a more politically responsive chair—could weaken data dependence, lifting long-term yields and pressuring TLH prices.

iShares 10-20 Year Treasury Bond ETF faces limited upside as long-term rates may remain elevated due to structural inflation and dollar concerns. TLH's high duration makes it sensitive to Fed rate decisions as well, but there are calls by Fed officials to slow down cuts, and there weren't signs of disinflation lately. There's also the more remote benchmarking risk associated with possible mandate changes one day and the fact that corporates may be more creditworthy than the US government.

The bond market looks increasingly focused on slowing economic growth vs. tariff inflation.

iShares 10-20 Year Treasury Bond offers an attractive balance between yield and duration. Despite trade war fears and rising inflation, TLH's real yield remains competitive. It's a contradiction, but tariff escalation could actually boost demand for Treasuries like TLH, as the USD becomes a safe haven and fiscal revenues rise.

We've identified numerous key rates between the 10 and 20 year region as compelling, despite interim supply/demand imbalances remaining. The iShares 10-20 Year Treasury Bond ETF isolates that part of the curve with a weighted average maturity of 17.11 years and an effective duration of 12.21 years. Our estimate aligns with a slower economy, inconsistent monetary policy, and exacerbated credit risk. Combined we see lower 10-20 year yields unfolding in due course.

In recent days, a new headwind is weighing on fixed income securities: a US government budget bill, which is expected to significantly raise an already hefty federal deficit in the years ahead. Long-term Treasuries are the biggest losers post-Liberation Day, based on a set of ETFs through yesterday's close (May 21).

Market volatility presents both risks and opportunities, emphasizing the importance of timing over price action for successful trading and investing. Pair trades with sound financial logic, like long treasuries and short corporate fixed-rate perpetuities, can capitalize in times of distress. The recently opened pair trade in iShares 10-20 Year Treasury Bond ETF and Invesco Preferred ETF generated significant profits due to credit spread widening.

U.S. fixed income ETFs garnered strong flows in February, uncovering insights into investor behavior and risk appetite in 2025. The $1.6 trillion U.S. fixed income ETF segment took in $31 billion in net flows in February, bringing year-to-date flows to $59 billion as of the end of the month.