VGLT - Vanguard LTT ETF?

[TripleB]

Anyone seen this yet? I haven't heard anything about it on the forums and ran across it randomly perusing their site:

https://personal.vanguard.com/us/funds/ ... st=tab%3A0

The holdings appear to be perfect for the PP, as opposed to the mutual fund VUSTX which only holds 80% LTTs.

[dualstow]

It's come up a few times last year.
Wild About Harry's thread
Breslow's thread.

The average maturity isn't long enough, or at least not long compared to what else is out there.

[Tortoise]

From VGLT's prospectus:

Primary Investment Strategies

The Fund employs a “passive management”?—or indexing—investment approach designed to track the performance of the Barclays Capital U.S. Long Government Float Adjusted Index. This Index includes fixed income securities issued by the U.S. Treasury (not including inflation-protected bonds) and U.S. government agencies and instrumentalities, as well as corporate or dollar-denominated foreign debt guaranteed by the U.S. government, with maturities greater than 10 years.

The Fund invests by sampling the Index, meaning that it holds a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. All of the Fund’s investments will be selected through the sampling process, and at least 80% of the Fund’s assets will be invested in bonds included in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of
the Index, which, as of August 31, 2011, was 23.4 years.

For comparison, here is the equivalent passage from VUSTX's prospectus:

Primary Investment Strategies

The Fund invests at least 80% of its assets in U.S. Treasury securities, which include bills, bonds, and notes issued by the U.S. Treasury. The Fund is expected to maintain a dollar-weighted average maturity of 15 to 30 years.

These are very similar statements. Both VGLT and VUSTX are allowed by their prospectuses to invest up to 20% of their assets in any crap they feel like. Furthermore, the 80% non-crap portion of VGLT is not guaranteed to be solely LT Treasuries--it can include "U.S. government agencies and instrumentalities, as well as corporate or dollar-denominated foreign debt guaranteed by the U.S. government."

If a year from now, for example, both of those funds happened to be holding their maximum 20% crap allowance, VUSTX might be seen as the lesser of two evils since at least you'd know its other 80% was pure LT Treasuries. With VGLT, the other 80% would be only partly LT Treasuries since its target index includes various non-Treasury bonds.

Bottom line: I don't see one of those funds as being a "clear winner" in relation to the other. Their percentage Treasury holdings at any moment in time is incidental since it may change a month or a year from now. It's the percentage Treasury holdings required by their prospectuses that is more important, IMO.