IEF vs VGIT

IEFBiShares 7-10 Year Treasury Bond ETF

VGITAVanguard Intermediate-Term Treasury ETF

In short

IEF Since 2002, one clean slice of the Treasury curve: government bonds maturing in seven to ten years, nothing shorter, nothing longer. It is among the most actively traded funds in its category.

VGIT The middle of the Treasury curve, priced like an afterthought. VGIT holds government bonds maturing in 3 to 10 years for 0.03% a year, a quarter of what the typical Treasury fund in its peer group charges.

Stated mandate

IEF The fund seeks to track the ICE U.S. Treasury 7-10 Year Bond Index, which represents publicly issued U.S. Treasury obligations with remaining maturities from seven through ten years.

VGIT Seeks to track a market-weighted Treasury bond index while maintaining an intermediate-term dollar-weighted average maturity.

Why people hold it

• IEF The mandate is narrow on purpose: Treasuries maturing in seven to ten years. Broad 3-10 year rivals like VGIT blend in shorter paper, so this is intermediate duration undiluted.vanguard.com
• Running since 2002 and now one of the largest, most heavily traded funds in its corner of the bond market, which tends to show up as tight spreads on screen.
• Tracking has been close: the fund has stayed near its ICE index rather than drifting, and it hands cash back monthly.
• Pure US government paper, so the portfolio carries no corporate credit risk and no currency exposure.

• VGIT Charges 0.03% a year against a 0.12% median for Treasury funds in its peer group. In bonds, where the coupon does the work, that fee gap is most of the argument.
• Plain index work: it follows the Bloomberg U.S. Treasury 3-10 Year Bond Index with very little slippage, one of the tighter implementations in its Treasury peer group.vanguard.com
• Running since 2009 and now a multi-billion-dollar fund that trades actively, so spreads stay tight. Interest lands monthly.
• The portfolio is U.S. government paper only, a few dozen issues. No corporate borrowers to underwrite, no credit research required.vanguard.com

Worth knowing

• IEF At 0.15% a year, this is not the budget door. The cohort median is nearer 0.12%, and VGIT, SPTI and SCHR all charge 0.03%. The premium buys scale and liquidity, not cheapness.
• Seven to ten year bonds react more sharply to rate moves than short-dated Treasuries, so price swings can be real even with government credit behind them.ishares.com
• No corporates, no foreign debt, no shorter maturities. Anyone wanting one all-in-one bond sleeve is only getting a single segment of the curve here.

• VGIT Intermediate maturities cut both ways. A 3 to 10 year book reprices more when yields move than a bill fund does, so the ride is bumpier than cash-like Treasury products.
• Treasuries only means no corporate credit premium in the yield. Income comes strictly from government coupons, and the monthly payout drifts with rates.

Full IEF profile⁠

Full VGIT profile⁠