The Vanguard Intermediate-Term Corporate Bond ETF (VCIT 0.51%) and iShares 3-7 Year Treasury Bond ETF (IEI 0.25%) diverge meaningfully on cost, yield, portfolio risk, and underlying bond exposure, with VCIT emphasizing investment-grade corporates and IEI focusing on U.S. Treasury securities.
Both VCIT and IEI target intermediate-term U.S. fixed income, but their makeup and risk/return profiles differ. VCIT invests in investment-grade corporate bonds, aiming for moderate income and diversification, while IEI tracks U.S. Treasuries with three- to seven-year maturities, appealing to those prioritizing government credit quality and interest rate sensitivity.
Snapshot (cost & size)
| Metric | VCIT | IEI |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.03% | 0.15% |
| 1-yr return (as of 2026-02-27) | 7.9% | 5.7% |
| Dividend yield | 4.6% | 3.5% |
| Beta | 1.0 | 0.71 |
| AUM | $65.6 billion | $18.5 billion |
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.
VCIT is more affordable on fees, with a 0.03% expense ratio versus 0.15% for IEI, and it also offers a higher yield, paying out 4.6% compared to IEI’s 3.5% as of early 2026.
NASDAQ: IEI
Key Data Points
Performance & risk comparison
| Metric | VCIT | IEI |
|---|---|---|
| Max drawdown (5 y) | -20.56% | -13.89% |
| Growth of $1,000 over 5 years | $895 | $921 |
NASDAQ: VCIT
Key Data Points
What's inside
IEI tracks U.S. Treasury bonds with maturities between three and seven years, holding 82 issues as of its 19-year history. It is a pure government-bond portfolio with no credit risk beyond U.S. sovereign debt.
VCIT, by contrast, holds over 340 investment-grade corporate bonds, spanning sectors via issuers like Meta Platforms, Bank of America, and Pfizer Investment Enterprises. This corporate tilt increases yield potential and introduces some credit risk, but also provides broader issuer diversification than IEI’s Treasury-only holdings.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Both of these funds target the middle of the bond market—avoiding both the skimpy income of short-term bonds and the price volatility that comes with lending money for 10, 20, or 30 years. But VCIT lends exclusively to investment-grade corporations, such as major banks, utilities, and industrial companies issuing debt to fund operations and growth. IEI holds only U.S. Treasury bonds backed by the federal government's full taxing authority, eliminating corporate credit risk entirely.
That borrower difference drives everything. VCIT compensates investors for accepting the possibility that corporate issuers could struggle to repay debt during economic downturns, delivering a roughly 1 percentage point higher yield and stronger 2025 returns. IEI sacrifices that extra income for absolute certainty—during market chaos, Treasuries rally as panicked investors flee riskier assets, while corporate bond spreads widen and prices wobble. VCIT also charges a rock-bottom 0.03% expense ratio versus IEI's 0.15%, though both remain inexpensive.
VCIT makes sense for investors comfortable accepting modest corporate credit risk to enhance bond allocation income, particularly during stable economic periods when defaults stay rare. IEI suits conservative investors prioritizing capital preservation and wanting bonds that reliably zig when stocks zag, even if it means permanently sacrificing nearly a percentage point of annual yield for that government-guaranteed safety.
