BND -0.03% IEI +0.04% ^GSPC -0.22% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Vanguard Total Bond Market ETF (NASDAQ:BND) provides broader fixed-income exposure and lower costs compared to the iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI), which focuses exclusively on intermediate U.S. Treasuries.
These two exchange-traded funds (ETFs) serve as foundational building blocks for income-seeking portfolios. While iShares 3-7 Year Treasury Bond ETF targets a specific slice of the government bond market with shorter durations, Vanguard Total Bond Market ETF casts a much wider net across the entire taxable U.S. investment-grade universe.
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Vanguard Total Bond Market ETF is the more affordable option, sporting a razor-thin 0.03% expense ratio compared to 0.15% for the iShares fund. Investors also gain a 0.35 percentage point yield advantage by choosing the Vanguard fund's broader portfolio.
Vanguard Total Bond Market ETF provides broad exposure to the U.S. taxable, investment-grade bond market, specifically excluding inflation-protected and tax-exempt securities. It holds 16,281 holdings, and its largest positions include a wide variety of debt instruments, with no single position exceeding 0.47% of the portfolio. Launched in 2007. Vanguard Total Bond Market ETF has paid $2.93 per share over the trailing 12 months, which, on its recent ~$70.28 share price, works out to a 4.2% yield.
iShares 3-7 Year Treasury Bond ETF focuses exclusively on U.S. government Treasury securities with remaining maturities between three and seven years. It holds 85 holdings, including Treasury Note 4.38% 11/30/2030, Treasury Note 4.38% 07/31/2031, and Treasury Note 4.00% 02/28/2030. Launched in 2007. iShares 3-7 Year Treasury Bond ETF has paid $4.34 per share over the trailing 12 months, which, on its recent ~$113.44 share price, works out to a 3.8% yield.
For more guidance on ETF investing, check out the full guide at this link.
Vanguard Total Bond Market ETF and iShares 3-7 Year Treasury Bond ETF are both designed to provide diversified fixed-income exposure and regular monthly distributions. Each holds investment-grade bonds, carries interest rate risk, and may lose value when market yields rise. Which one is a better buy depends, in part, on what you're looking for.
You're looking for a lower expense ratio: At 0.03%, BND's expense ratio is one-fifth that of IEI's.
You need broader diversification: BND provides broad exposure to U.S. investment-grade bonds, including Treasuries, mortgage-backed securities, agencies, and corporate bonds. IEI is limited to intermediate-term Treasuries.
Income potential is important to you: Corporate and mortgage-backed holdings may offer higher long-term yield than Treasury-only holdings.
You're concerned about credit risk: IEI holds only U.S. Treasuries, eliminating exposure to corporate defaults -- unlike BND's inclusion of corporate bonds.
You want a fund that offers simplicity and transparency: A pure Treasury portfolio is easier to evaluate than BND's mix of sectors.
You want an ETF that holds steady during market volatility: While there's no guarantee, Treasuries often outperform corporate holdings during market turmoil.
If you're looking for a low expense ratio, broad diversification, and steady income potential, the Vanguard Total Bond Market ETF may be right for you. However, if your portfolio can use a simple, transparent ETF likely to hold steady during market downturns, IEI is worth a closer look.
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Dana George has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.
Bond Face-Off: Vanguard Total Bond Market ETF vs. iShares Treasury Bond ETF was originally published by The Motley Fool
