30-year Treasury yields remained close to 5% this week, near cycle highs. Despite this, ETF investors are not rushing to buy long-term bonds like in 2023 when yields hit 5% for the first time in 16 years.

Investors have pulled $2 billion from the iShares 20+ Year Treasury Bond ETF (TLT) in 2025, bringing its assets under management down to $47 billion. The iShares 0-3 Month Treasury Bond ETF (SGOV) has become the largest Treasury-only ETF in the U.S with $51.3 billion in assets.

TLT’s demand drop is due to normalization after rates surged past 4% and 5%. Investors have grown accustomed to elevated yields for several years. Inflation concerns, federal debt worries, and escalating trade tensions also contribute to the lack of enthusiasm for long-duration exposure.

Short-term Treasury ETFs like SGOV have gained traction with a current 30-day SEC yield of 4.22%, offering lower duration exposure compared to TLT’s 4.92% yield. If the Federal Reserve cuts rates aggressively, TLT and other long-duration bond ETFs could regain favor as investors seek higher yields.

For now, investors prefer the safety and flexibility of T-bills over the volatility of long bonds. The risk/reward for long bonds looks more balanced today as various factors could push yields even higher.

Read more at Yahoo Finance: TLT Falls Out of Favor as Yields Stabilize Near 5%