LQD Offers Broader Bond Exposure Than SCHQ
Key Points
LQD charges a higher expense ratio but matches SCHQ on yield, offering a diverse corporate bond lineup versus SCHQ's focus on Treasuries.
LQD experienced a milder five-year drawdown and delivered better five-year growth than SCHQ.
LQD is vastly larger and more liquid, with over 3,000 holdings compared to SCHQ's 99.
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The iShares iBoxx Investment Grade Corporate Bond ETF (NYSEMKT:LQD) and the Schwab Long-Term U.S. Treasury ETF (NYSEMKT:SCHQ) differ sharply in terms of cost, liquidity, and portfolio focus, with LQD offering broader investment-grade corporate exposure at a higher fee, while SCHQ focuses on long-term Treasuries at a lower expense.
Both LQD and SCHQ offer investors ways to tap into high-quality U.S. fixed income, but their underlying strategies and risk profiles diverge. This comparison looks at cost, recent returns, risk, and what may appeal most to investors seeking different types of bond exposure.
Snapshot (cost & size)
| Metric | SCHQ | LQD |
|---|---|---|
| Issuer | Schwab | IShares |
| Expense ratio | 0.03% | 0.14% |
| 1-year total return (as of 2026-02-27) | 4.81% | 7.07% |
| Dividend yield | 4.43% | 4.44% |
| Beta | 2.16 | 1.38 |
| AUM | $945.5 million | $32.3 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
While SCHQ is more affordable with a 0.03% expense ratio, LQD matches it on yield but comes with a 0.14% fee. The higher cost of LQD buys access to a much broader slice of the U.S. investment-grade credit market.
Performance & risk comparison
| Metric | SCHQ | LQD |
|---|---|---|
| Max drawdown (5 y) | (46.13%) | (24.96%) |
| Growth of $1,000 over 5 years (as of March 3, 2026) | $792 | $1,021 |
What's inside
LQD is a giant in the U.S. bond ETF space, holding over 3,071 investment-grade corporate bonds across a wide range of issuers. Its top holdings include long-dated bonds from JPMorgan Chase, Bank of America, and Goldman Sachs, each making up over 2% of assets. The fund’s 23.6-year track record adds credibility for those seeking stability in the corporate bond market, and with no notable quirks or overlays, it delivers clean credit exposure.
In contrast, SCHQ is laser-focused on the long-term U.S. Treasury market. Its portfolio is almost entirely in government debt, which translates to lower credit risk but greater sensitivity to interest rate swings. The top holdings are various U.S. Treasury issues, offering a straightforward way to play duration risk without corporate credit exposure.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Both of these bond funds are solid choices for investors in 2026. The main advantage of SCHQ over LQD is its lower credit risk from holding Treasuries issued by the U.S. government, compared to LQD’s corporate bond focus, which adds issuer risk. It also offers a rock-bottom expense ratio of 0.03%.
However, LQD mitigates the added risk of corporate bonds by holding a large number of securities issued by industry-leading companies. Its track record speaks for itself, with five-year returns leaving investors with a small profit, despite the volatility in interest rates over the past five years.
Interest rate swings are the main handicap for investing in a long-duration portfolio of Treasury bonds. SCHQ’s effective duration across its holdings is currently 13.8 years, which makes it more sensitive to rate changes.
Investors are anticipating lower rates this year, following the Federal Reserve’s recent pivot to an easing monetary policy. This could benefit SCHQ investors, but it can also lead to volatility that investors seeking more income may not want for their nest egg.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.
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