Key Points
The Vanguard Intermediate-Term Treasury ETF provides low-cost exposure to government bonds while the Fidelity Investment Grade Bond ETF offers a diversified mix of high-grade corporate and government debt.
The Fidelity Investment Grade Bond ETF generated a higher one-year total return and trailing dividend yield but carries a significantly higher expense ratio and historical drawdown risk.
The Vanguard Intermediate-Term Treasury ETF maintains a much larger asset base and lower price volatility as indicated by its lower beta profile.
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The Vanguard Intermediate-Term Treasury ETF (NASDAQ:VGIT) offers a lower-cost, government-only strategy, while the Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) provides broader corporate exposure with a higher yield but at a steeper expense ratio.
Both funds serve as core fixed-income holdings designed to generate steady income and stabilize portfolios. While VGIT focuses strictly on the safety of U.S. Treasuries, FIGB casts a wider net across investment-grade sectors to potentially capture higher returns in exchange for increased credit risk.
Snapshot (cost & size)
| Metric | VGIT | FIGB |
|---|---|---|
| Issuer | Vanguard | Fidelity |
| Expense ratio | 0.03% | 0.36% |
| 1-yr return (as of 2026-04-17) | 4.7% | 6.7% |
| Dividend yield | 3.8% | 4.1% |
| Beta | 0.18 | 0.27 |
| AUM | $48.5B | $450.9M |
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.
Investors pay a premium for the active management and credit diversification of the Fidelity fund, which has an expense ratio 0.33 percentage points higher than the Vanguard fund. However, the Fidelity fund provided a higher payout recently.
Performance & risk comparison
| Metric | VGIT | FIGB |
|---|---|---|
| Max drawdown (5 yr) | (15.0%) | (18.1%) |
| Growth of $1,000 over 5 years (total return) | $1,018 | $1,023 |
What's inside
The Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) focuses on high-quality debt across various sectors, holding 180 different issues. This fund was launched in 2021 and has paid $1.77 per share over the trailing 12 months. It provides one-stop access to high-grade bond sectors, though its cash holdings represent 12% of the current allocation, a significant portion.
In contrast, the Vanguard Intermediate-Term Treasury ETF (NASDAQ:VGIT) is a dedicated fixed income fund that holds 76 U.S. Treasury issues. Its top holdings include United States Treasury Note/Bond 4.63% 02/15/2035 at 1.96%, United States Treasury Note/Bond 4.38% 05/15/2034 at 1.95%, and United States Treasury Note/Bond 4.25% 11/15/2034 at 1.91%. The Vanguard fund was launched in 2009 and has a trailing-12-month dividend of $2.27 per share. Unlike its counterpart, it carries no corporate credit risk, focusing entirely on the 3 to 10 year maturity range of government debt.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
When it comes to investing in bonds, both the Fidelity Investment Grade Bond ETF (FIGB) and Vanguard Intermediate-Term Treasury ETF (VGIT) offer reasons to buy. Choosing between these two comes down to individual investor goals.
VGIT is for those who seek maximum safety and low cost in exchange for lower income potential and dividend yield. The fund achieves this by focusing on intermediate-term Treasuries, which offer less volatility than long-term bonds and a higher yield than short term bonds.
FIGB is for investors who prioritize income. The fund delivered a greater one-year return and dividend yield compared to VGIT by mixing Treasuries with corporate bonds, but the tradeoff is a larger expense ratio. FIGB is an actively-managed ETF, which is why its cost is significantly higher. It also entails more risk because of the corporate bond component.
VGIT is ideal for capital preservation, and its low cost makes it affordable to hold over the long term. FIGB is the better choice for those looking for higher returns than that offered by pure Treasuries.
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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.
