Key Points
VCIT offers a higher yield and slightly better recent returns than VGIT.
VGIT experienced a smaller five-year drawdown, signaling lower downside risk.
Both funds charge the same ultra-low expense ratio and are highly liquid.
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The Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) and the Vanguard Intermediate-Term Treasury ETF (NASDAQ:VGIT) both keep costs low and target moderate-duration bonds, but VCIT delivers a higher yield and takes on more credit risk through its corporate debt holdings, while VGIT focuses exclusively on U.S. Treasuries and shows less historical drawdown.
Both VCIT and VGIT aim to provide steady income with moderate interest rate exposure, but they differ in their approach—one leans into investment-grade corporate bonds, the other stays strictly with U.S. government debt. This comparison covers cost, yield, performance, risk, and portfolio composition to help investors weigh their options.
Snapshot (cost & size)
| Metric | VGIT | VCIT |
|---|---|---|
| Issuer | Vanguard | Vanguard |
| Expense ratio | 0.03% | 0.03% |
| 1-yr return (as of 2026-01-30) | 6.6% | 8.8% |
| Dividend yield | 3.8% | 4.6% |
| Beta | 0.82 | 1.10 |
| AUM | $44.6 billion | $61.8 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 funds are among the most affordable in the bond ETF space, each charging just 0.03% annually, but VCIT offers a meaningfully higher yield, which may appeal to those seeking a bigger income stream without added expense.
Performance & risk comparison
| Metric | VGIT | VCIT |
|---|---|---|
| Max drawdown (5 y) | (15.04%) | (20.56%) |
| Growth of $1,000 over 5 years | $867 | $872 |
What's inside
VCIT invests in a broad mix of high-quality, investment-grade corporate bonds. Its top positions include Meta Platforms (NASDAQ:META), United States Treasury Note/Bond, and Bank of America (NYSE:BAC), each making up a small slice of the portfolio. The fund has been operating for over 16 years and maintains a pure fixed income allocation, with no sector quirks or leverage involved.
By contrast, VGIT sticks exclusively to U.S. Treasury securities, with its entire allocation in government notes and bonds. Its top holdings are various Treasury issues, and it carries a smaller number of positions, offering a straightforward approach for those seeking government-only exposure and minimal credit risk.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Both of these Vanguard funds hold intermediate-term bonds maturing in 5-10 years, but they're lending to completely different borrowers. VCIT buys investment-grade corporate debt from blue chip companies like major banks, utilities, and industrial giants. VGIT sticks exclusively to U.S. Treasury bonds, lending directly to the federal government.
That borrower difference drives everything else. VCIT delivered nearly 9% returns in the last year with a 4.6% yield, compensating investors for taking corporate credit risk—the chance that even well-rated companies could struggle to repay if economic conditions deteriorate. VGIT returned around 7% with a 3.7% yield, offering lower income but ironclad safety since Treasuries carry the full backing of the U.S. government. During market volatility, Treasuries typically rally as investors flee to safety, while corporate bonds can wobble when recession fears spike.
VCIT makes sense for investors comfortable accepting corporate credit risk to boost income in their bond allocation. VGIT is a better choice for conservative investors prioritizing capital preservation and seeking the stability bonds offer during downturns, even if it means sacrificing nearly a percentage point of annual yield for government-guaranteed safety.
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Bank of America is an advertising partner of Motley Fool Money. Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. 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.
