Which Long-Term Corporate Bond ETF Is the Better Buy: Vanguard’s VCLT or State Street’s SPLB?

Comparing Vanguard Long-Term Corporate Bond ETF (NASDAQ:VCLT) and State Street SPDR Portfolio Long Term Corporate Bond ETF (NYSEMKT:SPLB) reveals two low-cost options for long-term corporate credit exposure with nearly identical historical returns.

These funds target corporate bonds with maturities of 10 years or more, offering higher yields than shorter-duration alternatives at the cost of increased interest rate sensitivity. This makes them popular tools for long-term income seekers. While the SPDR fund and Vanguard fund follow different indexes, their portfolios remain remarkably consistent.

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.

Vanguard provides a slightly more affordable entry point with a 0.03% expense ratio compared to the 0.04% for SPDR. Investors may also find the higher 6% yield of the Vanguard fund appealing.

Performance & risk comparison

What's inside

Vanguard Long-Term Corporate Bond ETF functions as a fixed income fund without an equity sector breakdown, currently holding 2,566 positions in investment-grade corporate debt. The fund targets an average maturity that typically falls within a range of 10 to 25 years and was launched in 2009. Vanguard Long-Term Corporate Bond ETF has paid $4.13 per share over the trailing 12 months, which on its recent ~$70.0 share price works out to a 6% yield.

State Street SPDR Portfolio Long Term Corporate Bond ETF also serves as a fixed income fund with no equity sector breakdown, currently managing a slightly larger basket of 2,965 holdings. It tracks the Bloomberg U.S. Long Term Corporate Bond Index, and the portfolio is highly diversified. It was also launched in 2009. State Street SPDR Portfolio Long Term Corporate Bond ETF has paid $1.21 per share over the trailing 12 months, which on its recent ~$20.8 share price works out to a 5.8% yield.

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Which looks like the better buy

The most honest thing to say about VCLT and SPLB is that they are, for nearly all practical purposes, the same fund. They track virtually identical indexes, charge essentially the same fee, and have delivered returns so close over every meaningful time horizon that choosing between them on performance grounds alone would be splitting hairs.

What matters more is understanding what you are actually buying with either fund. Long-term corporate bonds sit at the riskier end of the fixed income spectrum because they offer higher yields than Treasuries or shorter-duration bonds, but they are highly sensitive to both interest rate moves and corporate credit conditions. When rates rise, long-duration bonds fall hard. When the economy weakens, corporate spreads widen and prices drop further. Both of these funds lived through exactly that during 2022 and 2023.

VCLT manages roughly seven times the assets of SPLB, giving it deeper liquidity and a longer institutional track record. For most long-term investors, that scale makes VCLT the more dependable default. SPLB is an equally sound choice for State Street platform investors or those who find marginally better pricing on their brokerage.

Sara Appino 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.