The U.S. Treasury Department, which oversees federal borrowing and manages the nation’s debt, recently posted on X highlighting that U.S. Treasurys are on pace for their strongest year since 2020.
The post compared annual returns from 2020 through 2025 and framed the rebound as a reward for investors who maintained confidence in President Donald Trump’s economic policies. The selected time period makes the recent performance look dramatic, but there is important context behind the moves.
Treasury prices fell sharply in 2021 and 2022 because large-scale COVID-19 stimulus pushed inflation higher. That surge in inflation led the Federal Reserve to raise interest rates repeatedly, eventually reaching a 5.5% policy rate. Rising rates reduce the value of existing bonds, which explains the deep negative returns in those years, particularly 2022.
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Conversely, Treasurys performed well in 2020 as the Fed cut rates at the onset of the pandemic, and investors sought the “flight to safety” effect that government bonds provide during market stress.
The recent rebound is thus less about tariff-driven fiscal policy and more about a shift in monetary policy, which started when the Federal Reserve began an interest-rate-cutting cycle in September 2024. The first move was a 0.5% cut, followed by multiple 0.25% cuts, bringing the policy rate down to about 4%.
Lower rates are a natural tailwind for Treasurys. Bond math is fairly straightforward: When yields fall, prices rise, especially for Treasury securities with a longer maturity.
Regardless of Trump’s policies, it’s important to remember that the Federal Reserve conducts policy independently and aims to balance its dual mandate of maximum employment and stable inflation.
Thus, if investors believe labor market pressures will continue to grow, they may expect further rate cuts. In that environment, overweighting Treasurys can be a reasonable way to position a portfolio.
Opting for Treasury exposure through an exchange-traded fund (ETF) also offers practical advantages, including the ability to trade intraday like a stock on most brokerage platforms, and the convenience of receiving monthly distributions instead of the typical semi-annual coupons.
Here are seven of the best Treasury ETFs to buy in 2025:
| ETF | Expense ratio | 30-day SEC yield |
| Vanguard Government Securities Active ETF (ticker: VGVT) | 0.10% | 3.8% |
| iShares U.S. Treasury Bond ETF (GOVT) | 0.05% | 3.9% |
| iShares 20+ Year Treasury Bond ETF (TLT) | 0.15% | 4.7% |
| Vanguard Extended Duration Treasury ETF (EDV) | 0.05% | 5.1% |
| BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF) | 0.03% | 3.7% |
| F/m US Treasury 10 Year Note ETF (UTEN) | 0.15% | 4.0% |
| iShares iBonds Dec 2030 Term Treasury ETF (IBTK) | 0.07% | 3.6% |
Vanguard Government Securities Active ETF (VGVT)
“Treasury ETFs allow investors to gain exposure through a stock-like instrument that trades on market exchanges,” says Tiana Patillo, financial advisor manager at Vanguard. “A Treasury ETF can provide greater liquidity, diversification and lower transaction costs.” Vanguard recently launched VGVT, which provides active management at a very competitive 0.1% expense ratio.
This ETF does not track an index. Vanguard’s fixed income managers curate a portfolio of Treasury and agency-backed securities from Fannie Mae, Ginnie Mae and Freddie Mac that they believe may outperform the Bloomberg US Government Total Return Index. VGVT currently pays a 3.8% 30-day SEC yield and has intermediate interest-rate sensitivity, with an average duration of 5.9 years.
iShares U.S. Treasury Bond ETF (GOVT)
VGVT is inexpensive for an actively managed fund, and its 0.1% expense ratio helps counter one of the primary criticisms of active management, which is the long-term drag created by higher fees. In Treasury ETFs, fees directly reduce the 30-day SEC yield investors receive. For even greater cost savings, the passively managed GOVT offers similar core exposure at half the cost, with a 0.05% expense ratio.
GOVT tracks the ICE US Treasury Core Bond Index, a benchmark that holds 225 Treasury bonds with maturities ranging from one year to 30 years. The portfolio averages out to an intermediate duration of 5.7 years. The fund’s income potential is slightly higher than VGVT, with a 3.9% 30-day SEC yield. GOVT is one of the most popular Treasury ETFs, managing more than $33 billion in assets.
iShares 20+ Year Treasury Bond ETF (TLT)
A rule of thumb for Treasury ETFs is that the longer the portfolio’s duration, the more sensitive its price is to interest rate changes. This sensitivity works in both directions. Rising rates put downward pressure on prices, while falling rates push prices higher. TLT illustrates this dynamic. It tracks the ICE U.S. Treasury 20+ Year Index and currently has a duration of 15.6 years, roughly twice that of GOVT.
This long duration made TLT one of the best-performing ETFs in 2020 as the Federal Reserve cut rates in response to the economic effects of COVID-19, producing a 17.9% total return for the year. The same sensitivity worked against it when rates were raised aggressively in 2022, leading to a 31.4% loss that exceeded the declines of many stocks. The fund charges a 0.15% expense ratio.
Vanguard Extended Duration Treasury ETF (EDV)
TLT is highly sensitive to interest rate movements, but it is not the most rate-sensitive Treasury ETF available. That distinction belongs to funds holding Strips, or separate trading of registered interest and principal securities. Because Strips have no periodic coupon payments, they behave like zero-coupon bonds and are thus extremely sensitive to rate changes.
For Strips exposure, Vanguard offers EDV at a 0.05% expense ratio. The fund tracks the Bloomberg U.S. Treasury Strips 20–30 Year Equal Par Bond Index, resulting in a duration of about 24 years. This extreme sensitivity helped EDV return 21.9% in 2020 when rates fell, but it also contributed to a 41.1% loss in 2022 during the rate-hiking cycle. EDV currently pays a 5.1% 30-day SEC yield.
[Read: 5 Great Fixed-Income Funds to Buy for 2025]
BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF)
Investors who want to minimize interest-rate sensitivity often choose Treasury ETFs that focus on the short end of the yield curve. XHLF fits this role. The fund tracks the Bloomberg U.S. Treasury Six Month Duration Index and maintains an average duration of 0.5 year. This keeps price movements very stable, though not as fixed as a money market fund. XHLF charges a 0.03% expense ratio.
“Considering ongoing U.S. economic growth, sticky inflation and the Trump administration’s policies, our view is that investors should stay short in duration in their Treasury exposure, as we expect continued heightened volatility at the long end of the Treasury curve,” says JoAnne Bianco, partner and senior investment strategist at BondBloxx. XHLF pays a 3.7% 30-day SEC yield.
F/m US Treasury 10 Year Note ETF (UTEN)
Most Treasury ETFs hold a mix of maturities. While they have an average duration, the underlying bonds can vary greatly, making them broad aggregate tools rather than precise instruments. Investors who want very specific exposure to a single maturity often turn to single-bond ETFs such as UTEN, which holds one security: the most recently issued, or “on the run,” U.S. 10-year Treasury note.
This is one of the most widely watched benchmarks in finance, and it influences everything from mortgage rates to corporate borrowing costs. UTEN is designed to give investors direct access to that maturity while retaining the liquidity of an ETF. It pays a 4% 30-day SEC yield after its 0.15% expense ratio. F/m Investments also has similar Treasury ETFs for different portions of the yield curve.
iShares iBonds Dec 2030 Term Treasury ETF (IBTK)
Another limitation of most Treasury ETFs is that they cannot be held to maturity the way an individual Treasury bond can. These funds hold diversified portfolios that are continually refreshed as older issues mature and new ones enter the index. This makes them evergreen tools, rather than solutions for investors with a defined time horizon who want predictable return of principal.
For that purpose, a target-maturity bond ETF can be useful. iShares offers a full lineup under its iBonds series, including IBTK. The fund holds Treasurys that mature between Jan. 1, 2030, and Dec. 15, 2030. Crucially, the ETF will liquidate at the end of that period and distribute proceeds to shareholders, similar to how an individual bond repays principal at maturity. IBTK currently offers a 3.6% 30-day SEC yield.
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7 Best Treasury ETFs to Buy Now originally appeared on usnews.com
Update 12/09/25: This story was published at an earlier date and has been updated with new information.
