Which Long-Term Bond ETF Is the Better Buy: State Street's SPLB or Vanguard's VGLT?
2026-07-23 20:10
•Sara Appino •The Motley Fool
•••• •• Axe Capital view
Long-Term Bonds: Yield vs Safety on the JSE Radar
Weighing State Street’s SPLB against Vanguard’s VGLT from a South African perspective.
The US long-term bond ETFs SPLB and VGLT both reflect strategies that resonate with different risk appetites, but how do they influence South African investors? SPLB, holding corporate bonds, offers a juicy 5.5% yield and lower drawdowns, making it appealing for income seekers wanting a bit more punch. Meanwhile, VGLT sticks to safer US Treasuries with a 4.7% yield and near-zero credit risk, attracting those wanting defensive ballast as rand volatility remains a concern. For rand-hedged portfolios, higher SPLB yields may offset currency pressures, but credit risk can bite if global growth slows. VGLT’s lower costs and stability suit investors bracing for uncertainty, especially with local banks like Standard Bank and FirstRand under pressure from rising rates. The catch? A strong USD could erode rand returns on both ETFs or shift domestic bond dynamics unexpectedly. If you trust the rand to stay steady or improve, SPLB’s income might outweigh its risks. this is just my opinion and not financial advice
For yield and moderate risk tolerance, I’d add SPLB selectively while hedging currency exposure. If you prefer safety to income, lean toward VGLT but expect lower returns. Keep an eye on USD/ZAR moves.
- SPLB
- VGLT
- USD/ZAR
- Strong USD reducing rand-denominated returns
- Corporate credit stress hurt SPLB payouts
6/10
State Street's SPLB and Vanguard's VGLT offer different approaches to long-term bond investing. SPLB provides higher yields (5.5%) through corporate bonds but carries credit risk, while VGLT offers safer Treasury bonds with a lower expense ratio (0.03%) but lower yields (4.7%). SPLB has shown better 5-year returns and lower drawdowns, making it suitable for income-focused investors, while VGLT serves as a defensive safe-haven option.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Sara Appino
Categories: Rates, Equities, Capital Returns, Financials
Tickers: SPLB, VGLT
Sentiment: Positive - SPLB demonstrates superior 5-year total returns ($854 vs $712), lower maximum drawdown (34.5% vs 41.0%), higher dividend yield (5.5%), and better recent performance. It is recommended for income-focused investors seeking maximum returns from long-term bonds. VGLT offers the lowest expense ratio (0.03%), zero credit risk through government-backed securities, and serves as a defensive safe-haven bond holding. It is recommended for risk-averse investors seeking portfolio stability and counterweight to equity risk.
Keywords: long-term bond ETF, corporate bonds, Treasury bonds, credit risk, interest rate risk, dividend yield, expense ratio, bond investing
Insights:
- SPLB: Positive: SPLB demonstrates superior 5-year total returns ($854 vs $712), lower maximum drawdown (34.5% vs 41.0%), higher dividend yield (5.5%), and better recent performance. It is recommended for income-focused investors seeking maximum returns from long-term bonds.
- VGLT: Positive: VGLT offers the lowest expense ratio (0.03%), zero credit risk through government-backed securities, and serves as a defensive safe-haven bond holding. It is recommended for risk-averse investors seeking portfolio stability and counterweight to equity risk.