Key Points
The Vanguard Intermediate-Term Corporate Bond ETF offers a significantly lower expense ratio of 0.03% and a higher dividend yield than the Fidelity Investment Grade Bond ETF.
The Vanguard Intermediate-Term Corporate Bond ETF maintains much larger assets under management at $66.4 billion compared to the $464.9 million held by the Fidelity Investment Grade Bond ETF.
The Fidelity Investment Grade Bond ETF has demonstrated a lower beta and a shallower maximum drawdown over the tracked period compared to the Vanguard Intermediate-Term Corporate Bond ETF.
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The choice between the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) and Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) hinges on factors such as whether an investor seeks the lowest possible fees or a diversified multi-sector approach to high-quality debt.
Investors looking for stable income often turn to investment-grade debt to balance equity risk. While both ETFs focus on high-quality bonds, they offer different internal compositions and fee structures. This comparison examines how the corporate-only focus of VCIT compares against the broader mandate found within the Fidelity fund.
Snapshot (cost & size)
| Metric | VCIT | FIGB |
|---|---|---|
| Issuer | Vanguard | Fidelity |
| Expense ratio | 0.03% | 0.36% |
| 1-yr return (as of May 11, 2026) | 7.20% | 5.10% |
| Dividend yield | 4.80% | 4.10% |
| Beta | 0.34 | 0.25 |
| AUM | $66.4 billion | $464.9 million |
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. Dividend yield is the trailing-12-month distribution yield.
Cost is a key differentiator here, as the Vanguard fund operates with a razor-thin expense ratio of 0.03%. The Fidelity fund is notably more expensive at 0.36%. For income-seekers, the Vanguard fund also provided a higher trailing-12-month dividend yield of 4.80% relative to the 4.10% offered by the Fidelity fund.
Performance & risk comparison
| Metric | VCIT | FIGB |
|---|---|---|
| Max drawdown (5 yr) | (20.60%) | (18.10%) |
| Growth of $1,000 over 5 years (total return) | $1,076 | $1,023 |
What's inside
The Fidelity Investment Grade Bond ETF provides exposure to a variety of high-grade bond sectors, including corporate and government debt. U.S. Treasury bonds are its largest position with government debt comprising 45.17% of the fund. This ETF holds 180 total issues and was launched in 2021. It has a trailing-12-month dividend of $1.77 per share.
In contrast, the Vanguard Intermediate-Term Corporate Bond ETF focuses exclusively on investment-grade corporate bonds. Its portfolio is highly diversified across 343 holdings, and no single position exceeds 0.31% of the assets. This ETF was launched in 2009 and has a trailing-12-month dividend of $3.94 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in bonds is a great way to diversify a portfolio, provide reliable income and preserve capital. The Fidelity Investment Grade Bond ETF (FIGB) and Vanguard Intermediate-Term Corporate Bond ETF (VCIT) offer these benefits, but choosing between them comes down to a few key considerations.
VCIT costs substantially less, offers a superior dividend yield, and delivered a higher one-year return. It also sports a far larger AUM, providing excellent liquidity. However, one important factor to consider is its focus on corporate bonds.
While VCIT’s holdings are investment grade, 47% of the fund is comprised of BBB-rated bonds. These carry far greater risk than FIGB’s government-focused debt.
FIGB may lack the qualities that make VCIT a compelling fund, but it offers investors far greater stability and reduced risk. This can be seen in its lower beta and max drawdown.
As a result, FIGB is the better choice for investors who prioritize reliability and low risk. VCIT, meanwhile, is for those who want to maximize yield in a low-cost, set-it-and-forget-it ETF.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
