Choosing between the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) and iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) involves balancing higher income potential from corporate credit against the safety and lower volatility of U.S. government treasuries.
Both exchange-traded funds manage sensitivity to interest rate changes by targeting middle-range maturities, yet they provide access to fundamentally different segments of the fixed-income market. The choice between them often hinges on an investor preference for the security of government backing versus the potentially higher yields found in corporate debt.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is the more affordable option, featuring a 0.03% expense ratio compared to 0.15% for the iShares fund. This 0.12 percentage point difference may influence long-term compounding.
Additionally, the Vanguard fund provides a higher payout for income-seeking investors, maintaining a dividend yield that is 1.15 percentage points higher than IEI as of June 17, 2026. The Vanguard fund also manages significantly more assets under management (AUM).
Performance & risk comparison
What’s inside
The iShares 3-7 Year Treasury Bond ETF is a fixed-income fund that replicates the performance of an index composed of U.S. government Treasury securities. It targets bonds with remaining maturities between three and seven years, a range that typically offers less volatility than longer-term debt. With 82 holdings, its largest positions include Treasury Note 4.38% 11/30/2030 at 2.91%, Treasury Note 4.00% 02/28/2030 at 2.31%, and Treasury Note 1.38% 11/15/2031 at 2.27%. This iShares fund was launched in 2007 and paid $4.26 per share over the trailing 12 months.
In contrast, the Vanguard Intermediate-Term Corporate Bond ETF aims to provide a higher income stream by investing in investment-grade corporate debt. Its portfolio of 343 holdings focuses on securities with dollar-weighted average maturities of five to 10 years, which generally results in higher interest rate sensitivity than the shorter-dated iShares fund. The fund is highly diversified, ensuring that no single position exceeds 0.31% of the portfolio. Launched in 2009, the Vanguard fund has a trailing-12-month dividend of $3.95 per share and carries more credit risk than its government-focused counterpart.