Vanguard’s extended-duration Treasury fund delivers outsized gains or losses tied directly to long-term yield movements.
The Vanguard Extended Duration Treasury Index Fund (EDV) gains roughly 24% for every 100 basis point decline in long-term yields, reflecting its 24-year duration. The fund holds zero-coupon Treasury STRIPS maturing in 20 to 30 years, amplifying price swings as yields shift.
Goldman Sachs projects the Fed funds rate will end 2026 between 3% and 3.25%, though persistent inflation may limit long-term yield declines. EDV’s performance over the past five years has been volatile, mirroring rising long-term rates.
Investors seeking stable Treasury exposure may prefer shorter-duration funds like BND or a laddered bond strategy to avoid EDV’s equity-like volatility.