Offering exposure to the fixed-income market, the iShares National Muni Bond ETF (NYSEMKT:MUB) and iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) both have a strong portfolio of government bonds. This comparison highlights how each fund stacks up on cost, yield, performance, and risk.
Snapshot (cost & size)
| Metric | MUB | IEI |
|---|---|---|
| Issuer | iShares | IShares |
| Expense ratio | 0.05% | 0.15% |
| 1-yr return (as of Feb. 7, 2026) | 0.59% | 2.61% |
| Dividend yield | 3.13% | 3.51% |
| Beta | 0.25 | 0.15 |
| AUM | $42.61 billion | $17.89 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
IEI has a higher annual fee but delivers a modestly higher yield and one-year return than MUB. But because MUB holds over 70 times more assets in its portfolio, it’s a broader investment with a higher AUM.
Performance & risk comparison
| Metric | MUB | IEI |
|---|---|---|
| Max drawdown (5 y) | -11.88% | -13.89% |
| Growth of $1,000 over 5 years | $916 | $898 |
What's inside
IEI holds 87 positions focused exclusively on U.S. Treasury bonds that mature in three to seven years, providing pure government exposure with minimal credit risk. The fund is nearly two decades old and holds AA-rated bonds, the second-best rating.
MUB spreads its assets across more than 6,000 investment-grade municipal bonds, with most of its holdings in bonds issued by state and local governments, unlike IEI, which focuses more on federally issued bonds. Interest earned from this ETF is exempt from U.S. income tax and the Alternative Minimum Tax (AMT).
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Over the last 12 months and throughout its existence, IEI’s price has performed better and with lower risk, with 100% of its holdings being federally-backed bonds. However, one can’t ignore MUB’s tax exemptions.
While AMT taxes generally apply to high-income investors, not having to pay income tax on interest means investors do not have to pay the IRS on the interest they earn. However, the ETF is not exempt from state taxes, so investors should check with their local state to see how taxes apply.
Another potential advantage for MUB is that, by design, it should be more volatile because it holds no federal bonds and consists of lower-rated assets than IEI.
This comes with risk, as lower ratings increase the likelihood of default by bond issuers. But if investors are willing to take on the risk, the increased volatility and tax exemptions may make MUB an option to consider.
