Personally, I think it matters a lot on why you are wanting long term treasuries(LTT). There are lots of competing ideas around ownership.
If you just want bonds, then LTT may not be the best move, it just depends. BND would be a better general bond portfolio. i.e. I dunno what I want, I just know I want bonds, then buy something like BND, since it aims to just own all the bonds.
Managed bond funds have more cost than something like TLT or BND, since they are index based. You have to pay someone to actively manage the bond ownership. Is the cost worth it? Only you can make that decision, generally speaking after fees active management doesn't usually earn extra income vs an index. The average return of active management after fees is usually under-performance relative to a benchmark index.
I think it's important to think of bonds by what they return(yearly cash flow), not by the NAV. i.e. if you buy a bond(or fund) yielding 5%/yr with $10k. That's a $500/yr income you just bought yourself. It doesn't really matter what the price of the bond(NAV) does, you will still get your $500/yr (until maturity and/or bankruptcy). Bonds are a cash-flow investment. If you want $500/yr then you buy $10k worth of 5%/yr yielding bonds.
If you want $25k/yr in income and the yield is 4%, then you need about $630k worth of those bonds(or bond fund). Buy the cash-flow not the yield or NAV. On existing bonds, the yield can't change, so the NAV/price does change. On new bonds the yield changes instead.
It's the same difference. Think about you as a person buying bonds. You have 2 choices:
* Old bond paying 5%
* New bond paying 10%
Which would you rather buy? well the new bond of course, so if the person with the old bond wants to sell, what do they have to do to incentivize you to buy it instead? lower the price, so that when you buy it, you are getting around 10%/yr yield to match the new bond yield.
This is how bond markets work, in a few sentences.
If you just want bonds, then LTT may not be the best move, it just depends. BND would be a better general bond portfolio. i.e. I dunno what I want, I just know I want bonds, then buy something like BND, since it aims to just own all the bonds.
Managed bond funds have more cost than something like TLT or BND, since they are index based. You have to pay someone to actively manage the bond ownership. Is the cost worth it? Only you can make that decision, generally speaking after fees active management doesn't usually earn extra income vs an index. The average return of active management after fees is usually under-performance relative to a benchmark index.
I think it's important to think of bonds by what they return(yearly cash flow), not by the NAV. i.e. if you buy a bond(or fund) yielding 5%/yr with $10k. That's a $500/yr income you just bought yourself. It doesn't really matter what the price of the bond(NAV) does, you will still get your $500/yr (until maturity and/or bankruptcy). Bonds are a cash-flow investment. If you want $500/yr then you buy $10k worth of 5%/yr yielding bonds.
If you want $25k/yr in income and the yield is 4%, then you need about $630k worth of those bonds(or bond fund). Buy the cash-flow not the yield or NAV. On existing bonds, the yield can't change, so the NAV/price does change. On new bonds the yield changes instead.
It's the same difference. Think about you as a person buying bonds. You have 2 choices:
* Old bond paying 5% * New bond paying 10%
Which would you rather buy? well the new bond of course, so if the person with the old bond wants to sell, what do they have to do to incentivize you to buy it instead? lower the price, so that when you buy it, you are getting around 10%/yr yield to match the new bond yield.
This is how bond markets work, in a few sentences.