Key Points
BSV is dramatically larger in AUM, and slightly cheaper than ISTB, while both deliver similar 1-year returns.
ISTB and BSV hold similar short-term bond portfolios, but BSV leans more on federal government bonds.
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Both the Vanguard Short-Term Bond ETF (NYSEMKT:BSV) and iShares Core 1-5 Year USD Bond ETF (NASDAQ:ISTB) target the short end of the U.S. bond market, focusing on investment-grade securities with maturities between one and five years. This comparison highlights key differences in cost, portfolio composition, and risk that could help investors decide which ETF best aligns with their fixed-income goals.
Snapshot (cost & size)
| Metric | ISTB | BSV |
|---|---|---|
| Issuer | IShares | Vanguard |
| Expense ratio | 0.06% | 0.03% |
| 1-yr return (as of Feb. 7, 2026) | 1.73% | 1.68% |
| Dividend yield | 4.14% | 3.86% |
| Beta | 0.11 | 0.09 |
| AUM | $4.79 billion | $43.41 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.
Both ETFs have similar expense ratios and one-year returns, but ISTB has the advantage in dividend yield percentage.
Performance & risk comparison
| Metric | ISTB | BSV |
|---|---|---|
| Max drawdown (5 y) | (9.34%) | (8.55%) |
| Growth of $1,000 over 5 years | $943 | $951 |
What's inside
BSV holds a mix of U.S. Treasuries and corporate and investment-grade international bonds. It has 3,117 holdings, of which 73% are AAA-rated bonds, the highest rating offered. However, approximately 12% is invested in A and BBB-rated bonds, which are riskier.
ISTB, by contrast, casts a much wider net with more than 7,000 holdings, with 61% being AA-rated bonds, the second highest. It also spreads its portfolio across multiple classes of bond ratings, but goes even deeper, holding bonds lower than B.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
With both of these ETFs, it’s important to consider the range of bonds they hold. BSV holds bonds that are in classes AA, A, and BBB, which are all riskier than AAA in order. ISTB goes lower than that, where it holds BB, B, and below B bonds.
This means these funds have higher volatility than other bond ETFs that focus solely on AAA/AA bonds. That’s because lower-rated bonds are more at risk of default, but there’s also often higher interest rates. So if investors want to take that risk, both ETFs are solid options, with ISTB offering greater price potential because it holds more lower-rated bonds.
Regardless of which ETF investors want to invest in, just be aware that the bond market moves more slowly than the stock market, which means these types of bond ETFs typically won’t see the growth of stock-centered funds, but offer stable and consistent dividend payouts.
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Adé Hennis has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Bond Index Funds - Vanguard Short-Term Bond ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
