VCIT vs IEI: Which Bond Strategy Is Better for Income Investors?

Sarah Sidlow, The Motley Fool

Tue, July 28, 2026 astatine 7:20 AM CDT 5 min read

The iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) offers a blimpish U.S. authorities focus, portion the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) provides higher yields done diversified firm recognition exposure.

Investors often measurement the information of government-backed indebtedness against the higher income imaginable of firm bonds. While some funds people the intermediate conception of the output curve, they disagree importantly successful recognition quality, disbursal structures, and humanities terms volatility. This investigation compares a Treasury-focused enslaved money with an investment-grade firm alternate to assistance clarify which mightiness amended service a portfolio allocation during antithetic involvement complaint environments.

Snapshot (cost & size)

Beta measures terms volatility comparative to the S&P 500; beta is calculated from monthly returns implicit the disposable money past (up to 5 years). The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months. Dividend output is the trailing-12-month organisation yield.

Cost-conscious investors whitethorn similar the Vanguard fund, which features a highly competitory 0.03% disbursal ratio, making it importantly much affordable than the 0.15% charged by the iShares fund. This disbursal spread of 0.12 percent points tin interaction semipermanent compounding. Furthermore, the Vanguard money offers a higher payout, providing 1.21 percent points much successful yearly organisation output than its Treasury-focused counterpart.

Performance & hazard examination

What's wrong

The iShares 3-7 Year Treasury Bond ETF focuses exclusively connected U.S. Treasury securities with remaining maturities betwixt 3 and 7 years. It holds 83 positions, each of which are Treasury Notes. The money was launched successful 2007. iShares 3-7 Year Treasury Bond ETF has paid $4.28 per stock implicit the trailing 12 months, which connected its caller ~$116.16 stock terms works retired to a 3.70% yield.

The Vanguard Intermediate-Term Corporate Bond ETF tracks the Bloomberg U.S. 5-10 Year Corporate Bond Index by investing successful investment-grade indebtedness from industrial, utility, and fiscal issuers. It is much diversified with astir 2,200 holdings; nary azygous presumption exceeds 0.31% of the portfolio. The money was launched successful 2009. Vanguard Intermediate-Term Corporate Bond ETF has paid $3.96 per stock implicit the trailing 12 months, which connected its caller ~$81.12 stock terms works retired to a 4.90% yield.