IGLB vs SCHQ: Corporate Bonds Beat Treasuries on Yield and Returns

The Schwab Long-Term U.S. Treasury ETF (NYSEMKT:SCHQ) provides low-cost exposure to government-backed debt, while the iShares 10+ Year Investment Grade Corporate Bond ETF (NYSEMKT:IGLB) targets higher yields through a diversified corporate credit portfolio.

Investors seeking long-duration bond exposure often choose between the perceived safety of U.S. Treasuries and the credit premium offered by high-quality corporations. While both funds are sensitive to interest rate changes, they have different risk profiles due to their underlying issuers.

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.

SCHQ is slightly more affordable with a 0.03% expense ratio. While both funds are inexpensive, IGLB provides a higher yield to compensate for its corporate credit exposure.

Performance & risk comparison

What's inside

SCHQ focuses exclusively on the long-duration segment of the U.S. Treasury market. Its portfolio comprises 100 holdings, primarily government debt and cash equivalents. Its largest positions include Treasury Bond 4.75% 02/15/2056 at 2.20% and Treasury Bond 4.75% 05/15/2055 at 2.19%.

The fund was launched in 2019. SCHQ has paid $1.47 per share over the trailing 12 months, which, at its recent $30.13 share price, works out to a 4.9% yield.

IGLB tracks high-quality corporate debt with maturities exceeding 10 years. It is highly diversified with 3,817 holdings, and no single position exceeds 0.30% of the portfolio.

The fund was launched in 2009. iShares 10+ Year Investment Grade Corporate Bond ETF has paid $2.61 per share over the trailing 12 months, which, at its recent $48.08 share price, works out to a 5.4% yield.

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What does this mean for investors?

These bond funds can also serve as complementary holdings to achieve a targeted blended yield in an investment portfolio. But there are a few things to keep in mind when choosing between these funds in 2026.

Corporate credit spreads are tight by historical standards. In a bear market, corporate yields will generally widen relative to treasuries, as investors perceive greater uncertainty about the markets and the economy. But as investor appetite for risk increases during a bull market, yields on corporate bonds and Treasuries can narrow.

When accounting for the additional risk of corporate credit, the roughly 5.4% dividend yield on IGLB may not be as attractive as the 4.9% yield on SCHQ. The narrower spread could create more downside for IGLB if the economy weakens and the stock market falls.

However, SCHQ has experienced a steeper drawdown in the last five years. This shows the risk that higher interest rates pose to long-term bond investors. If rates fall, both funds could perform well, but a further increase in interest rates could lead to losses.

John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.