iShares 3-7 Year Treasury Bond ETF (IEI +0.31%) and Vanguard Intermediate-Term Treasury ETF (VGIT +0.37%) both target U.S. Treasuries in the intermediate maturity range, but differ on cost, yield, and subtle portfolio focus.
Both the iShares 3-7 Year Treasury Bond ETF (IEI +0.31%) and the Vanguard Intermediate-Term Treasury ETF (VGIT +0.37%) aim to give investors exposure to U.S. Treasury bonds with moderate interest rate risk. While they share a similar investment universe, their approaches and fee structures create some meaningful differences worth considering for those comparing the two.
Snapshot (cost & size)
| Metric | VGIT | IEI |
|---|---|---|
| 1-yr return (as of Oct. 31, 2025) | 2.3% | 2.6% |
| Beta | 0.80 | 0.17 |
Beta reflects price volatility compared to the S&P 500.
VGIT is notably more affordable, with an expense ratio of just 0.03%, compared to 0.15% for IEI (as of Oct. 31, 2025). VGIT also offers a slightly higher yield, with a 3.8% payout versus 3.4% for IEI (yields as of Oct. 31, 2025), which could appeal to income-focused investors.
Performance & risk comparison
| Metric | VGIT | IEI |
|---|---|---|
| Max drawdown (5 y) | -15.52% | -14.21% |
| Growth of $1,000 over 5 years | $861 | $901 |
What's inside
IEI focuses on U.S. Treasury bonds with maturities between three and seven years, offering exposure to 82 holdings as of Nov. 3, 2025, with the top positions being Treasury Note 0.04%, Treasury Note 0.04%, and Treasury Note 0.03%. Its sector allocation is listed as 100% cash and others.
VGIT, in contrast, invests in U.S. Treasury bonds with maturities ranging from three to 10 years, resulting in a slightly longer average maturity profile and 76 holdings as of Nov. 3, 2025, with United States Treasury Note/Bond (NYSE:T) at 1.00% and US Dollar (AMEX:USD) at 0.00% among its top holdings. VGIT also applies an ESG screen, which may appeal to investors with sustainability concerns.
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Foolish take
iShares 3-7 Year Treasury Bond ETF and Vanguard Intermediate-Term Treasury ETF both operate in the same region of the Treasury market, yet they approach it with different priorities. Both ETFs are designed for investors seeking stability and controlled interest rate risk. However, the choices each fund makes around maturity range, cost, and portfolio design lead them to play very different functions inside a bond allocation. Those differences matter when treasury bonds are meant to stabilize your portfolio or counterbalance riskier positions.
VGIT’s advantage begins with cost. Its 0.03 percent fee places it among the lowest-cost intermediate Treasury options available, and the fund’s slightly broader maturity range allows it to capture a bit more yield. That combination of efficiency and income potential makes VGIT a straightforward choice for investors seeking a dependable, long-term anchor in their bond portfolio.
IEI maintains a maturity focus of 3 to 7 years and offers investors a more contained level of rate sensitivity. This narrower exposure appeals to those who prefer a cleaner interpretation of the intermediate segment, even at a higher fee. It integrates naturally with the iShares suite and maintains the simplicity some investors value in a core bond holding.
Both ETFs are built to steady your portfolio, and they speak to different instincts investors bring to their bond allocation. If you want something low-cost, broad, and easy to hold without overthinking it, VGIT gives you that sense of comfort. If you care more about keeping your maturity window tight and your interest-rate exposure clearly defined, IEI offers that precision.
Glossary
ETF (Exchange-Traded Fund): A fund that trades on stock exchanges and holds a basket of assets, like stocks or bonds.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: The annual income from dividends, expressed as a percentage of the investment's price.
Beta: A measure of an investment’s volatility compared to the overall market, often the S&P 500.
AUM (Assets Under Management): The total market value of assets that a fund manages on behalf of investors.
Max drawdown: The largest percentage drop from a fund’s peak value to its lowest point over a specific period.
Holdings: The individual securities or assets that make up a fund’s portfolio.
Sector allocation: The distribution of a fund’s investments across different industry sectors or asset categories.
Average maturity: The weighted average time until the bonds in a fund’s portfolio mature.
ESG screen: A filter that selects investments based on environmental, social, and governance criteria.
