SPIB vs VCIT

SPIBAState Street SPDR Portfolio Intermediate Term Corporate Bond ETF

VCITAVanguard Intermediate-Term Corporate Bond ETF

In short

SPIB The middle of the corporate bond curve in one ticker: investment-grade company debt maturing in one to ten years, thousands of issues deep, for 0.04% a year. Trading since 2009.

VCIT Vanguard's corporate-bond workhorse: a broad basket of investment-grade company debt at three basis points, undercutting every other top-graded fund in its peer group. Running since 2009, paying monthly.

Stated mandate

SPIB The fund seeks to track the Bloomberg Intermediate US Corporate Index and provide exposure to U.S. corporate bonds with maturities of at least 1 year and less than 10 years.

VCIT The Fund seeks to track a market-weighted corporate bond index with an intermediate-term dollar-weighted average maturity.

Why people hold it

• SPIB 0.04% a year sits at the floor of the investment-grade corporate group, a hair off the cheapest name in the top tier (VCIT, 0.03%).
• One fund covers the whole 1-to-10-year span. iShares splits that same range across two tickers (IGSB for 1-5 years, IGIB for 5-10).
• Roughly 5,000 bonds spread single-issuer risk thin, and the fund has tracked its Bloomberg corporate benchmark closely.
• Heavily traded, pays monthly, and rates as one of the stronger implementations in the investment-grade corporate peer group.

• VCIT Charges 0.03% a year, roughly a sixth of the category's typical fee and a notch below the 0.04% carried by peers USIG, SPIB, IGIB and IGSB.
• Hugs its market-weighted corporate bond index closely, with index-matching among the tightest in its peer group. You get the market, not a manager's hunches.
• A multi-billion-dollar fund and one of the most actively traded in investment-grade corporate credit, which keeps spreads tight and large orders drama-free.
• Pays monthly, and the coupons come from pure corporate credit rather than a blend watered down with government paper.

Worth knowing

• SPIB Pure corporate credit. No Treasuries or agency paper in the mix to cushion a widening in company spreads.
• Intermediate maturities move more on rate swings than a short-dated corporate fund such as IGSB.
• The monthly payout floats with market yields and the bonds the index holds. It is not a fixed amount.

• VCIT Intermediate maturities mean real rate sensitivity: when yields rise, share prices fall, and there is no maturity date to sit and wait for.
• All corporate borrowers, so downgrades and defaults are part of the deal in a way they are not for a Treasury fund.
• Market weighting sizes positions by debt outstanding, so the companies that borrow the most get the biggest slots.

Full SPIB profile⁠

Full VCIT profile⁠