Bond ETFs in 2026 have been a story of rising long-term yields. The 10-year Treasury yield climbed from 3.74% on January 2, 2026 to 4.51% on August 14, while the 30-year moved from 4.86% to 5.25% [1][2]. That lifted the income on offer, with the iShares 20+ Year Treasury Bond ETF (TLT) showing a 30-day SEC yield of 4.89% and the iShares Core U.S. Aggregate Bond ETF (AGG) 4.51% as of June 30, 2026, but it also cost long-duration holders price losses [3][4]. AGG and the Vanguard Total Bond Market ETF (BND) held up better: BND returned 0.71% in the first half of 2026 and AGG 3.80% over one year to June 30 [4][5].
What rates did in 2026: the yield curve moved
| Treasury par yield | Jan 2, 2026 | Aug 14, 2026 | Change (points) |
|---|---|---|---|
| 3-month | 3.65% | 3.81% | +0.16 |
| 2-year | 3.47% | 4.17% | +0.70 |
| 10-year | 3.74% | 4.51% | +0.77 |
| 30-year | 4.86% | 5.25% | +0.39 |
Data: U.S. Treasury daily par yield curve rates [1][2].
The curve steepened from the front: the 2-year yield rose 0.70 points and the 10-year 0.77 points, while the 30-year rose 0.39 points [1][2]. Short rates, anchored by the Federal Reserve, barely moved. The effective federal funds rate was 3.63% in June, July and August 2026, down from 4.33% in mid-2025 and 3.88% in November 2025, according to DataPorium's economic data [6]. Long yields rose even as the policy rate stayed put, and the whole coupon curve repriced upward.
Duration: why TLT lost and AGG did not
Duration measures how much a bond fund's price moves for a one-point change in yields. TLT's effective duration was 15.31 years on June 30, 2026, with a weighted average maturity of 26.03 years across just 46 Treasury bonds [3]. AGG's duration was 5.80 years across 13,224 holdings, and BND's 5.8 years across 11,476 bonds [4][5]. A 0.39 point rise in 30-year yields implies a price loss near 6% for a portfolio with 15 years of duration, which the fund's income offsets only slowly. For AGG and BND, a 0.7 point rise in intermediate yields implies about a 4% price hit, roughly matched by a year of income at a 4.5% yield, which is why their one-year returns are positive but modest.
The record bears this out. TLT's calendar-year returns were minus 4.76% in 2021, minus 31.41% in 2022, 2.96% in 2023, minus 7.84% in 2024 and 4.17% in 2025, and its five-year annualized return to June 30, 2026 was minus 6.66% [3]. AGG lost 13.06% in 2022 but returned 5.58% in 2023, 1.37% in 2024 and 7.19% in 2025, for a five-year annualized return of 0.09% [4]. BND's five-year figure was 0.07% and its ten-year 1.53% [5].
The three funds side by side
| As of June 30, 2026 | TLT | AGG | BND |
|---|---|---|---|
| Expense ratio | 0.15% | 0.03% | 0.03% |
| 30-day SEC yield | 4.89% | 4.51% | n/a |
| Effective duration | 15.31 years | 5.80 years | 5.8 years |
| Holdings | 46 | 13,224 | 11,476 |
| 1-year return (NAV) | 2.41% | 3.80% | 3.70% |
| 3-year return (annualized) | -1.65% | 4.16% | 4.15% |
| Net assets | $41.1 billion | $138.8 billion | $159.8 billion (ETF shares) |
Data: iShares and Vanguard fact sheets as of June 30, 2026 [3][4][5].
Credit quality and what each fund actually owns
TLT is 99.63% Treasuries rated AA, with 99.46% of the portfolio maturing in more than 20 years, so its only meaningful risk is interest rate risk [3]. AGG holds 46.26% Treasuries, 23.43% agency mortgage pass-throughs, 14.28% industrial corporates and 7.90% financial corporates; 73.60% of the fund is rated AA, 11.85% A and 11.63% BBB, with nothing below investment grade [4]. BND is similar: 69.0% U.S. government securities, 12.0% A-rated and 12.4% BBB-rated bonds, with 49.2% in Treasuries and agencies and 19.3% in government mortgage-backed securities [5]. Both aggregate funds carry modest credit risk and are diversified across thousands of issues. Neither is a substitute for a Treasury-only fund in a flight to quality, and neither carries TLT's rate sensitivity.
What the numbers suggest for bond ETFs in 2026
- Income is back: a 4.5% to 4.9% SEC yield on investment-grade and Treasury funds is the highest starting yield in years and now cushions a meaningful rate rise [3][4].
- Duration is a choice, not a default: TLT's 15.3-year duration is a concentrated bet on falling long rates; in 2026 that bet has not paid [2][3].
- Core funds are the base case: AGG and BND at 0.03% give broad exposure with a 5.8-year duration that balances income and price risk [4][5].
- Fees matter more when yields are moderate: Vanguard reports the average core bond fund charged 0.62% as of December 31, 2025, more than a tenth of the yield on offer [5].
With the 10-year at 4.51% and the policy rate at 3.63%, intermediate bond ETFs finally pay more than cash, while TLT's 15-year duration keeps it tied to the long end of the curve.
Rate and inflation series behind these funds, including the federal funds rate, are tracked on DataPorium's economic metrics page, and fund data on the ETF page [6].
Key takeaways
- The 10-year Treasury yield rose from 3.74% on January 2 to 4.51% on August 14, 2026; the 30-year from 4.86% to 5.25% [1][2].
- TLT yielded 4.89% with a 15.31-year duration; AGG 4.51% with 5.80 years, as of June 30, 2026 [3][4].
- TLT's five-year annualized return was minus 6.66%; AGG's was 0.09% and BND's 0.07% [3][4][5].
- AGG and BND hold about 12% BBB bonds and no high yield; TLT is all long Treasuries [3][4][5].
- The effective federal funds rate held at 3.63% from June through August 2026 [6].
Frequently asked questions
Why is TLT down when yields are high?
Because its 15.31-year duration means a 0.39 point rise in 30-year yields, as seen between January 2 and August 14, 2026, cuts its price by roughly 6%, more than a year of its 4.89% yield [2][3].
Is BND or AGG better?
They are nearly identical: both charge 0.03%, have a duration of about 5.8 years and returned 3.7% to 3.8% over the year to June 30, 2026 [4][5]. BND tracks a float-adjusted version of the same Bloomberg aggregate index.
What is the current yield on AGG?
AGG's 30-day SEC yield was 4.51% as of June 30, 2026, with a weighted average maturity of 8.11 years [4].
What happened to bond yields in 2026?
Yields rose across the curve: the 2-year went from 3.47% to 4.17% and the 10-year from 3.74% to 4.51% between January 2 and August 14, 2026, while the federal funds rate stayed at 3.63% [1][2][6].
Sources & References
- [1] U.S. Treasury Daily Par Yield Curve Rates, January 2026
- [2] U.S. Treasury Daily Par Yield Curve Rates, August 2026
- [3] iShares 20+ Year Treasury Bond ETF (TLT) Fact Sheet as of June 30, 2026
- [4] iShares Core U.S. Aggregate Bond ETF (AGG) Fact Sheet as of June 30, 2026
- [5] Vanguard Total Bond Market ETF (BND) Fact Sheet as of June 30, 2026
- [6] DataPorium Economic Metrics: Federal Funds Rate, Inflation and Other U.S. Series
