Intermediate Treasury ETFs: Vanguard's VGIT Cuts Costs to the Bone While iShares' IEI Emphasizes Stability

Core Insights - The article compares two exchange-traded funds (ETFs), Vanguard Intermediate-Term Treasury ETF (VGIT) and iShares 3-7 Year Treasury Bond ETF (IEI), highlighting their differences in cost, yield, performance, and risk [1][2]. Cost Comparison - VGIT has a lower expense ratio of 0.03% compared to IEI's 0.15%, making it more cost-effective for investors [3][4]. - VGIT offers a higher dividend yield of 3.8% versus IEI's 3.4%, appealing to income-focused investors [3][9]. Performance & Risk Analysis - Over the past five years, VGIT experienced a maximum drawdown of -15.43%, while IEI had a shallower drawdown of -14.22%, indicating better downside protection for IEI during market volatility [5][10]. - The growth of $1,000 over five years shows VGIT growing to $858, while IEI grows to $898, suggesting IEI's recent performance is slightly stronger [5]. Fund Composition - VGIT holds 105 U.S. Treasury issues with maturities ranging from three to ten years, while IEI focuses on 83 holdings with maturities between three and seven years [6][7]. - The top holdings for VGIT include U.S. Treasury Notes with yields of 2.03%, 1.98%, and 1.97%, while IEI's top positions include Treasury Notes with yields of 4.07%, 3.58%, and 2.92% [6][7]. Investor Implications - Both VGIT and IEI are suitable for conservative investors seeking stability and reliable income, as they invest in U.S. government bonds with similar maturity ranges [8]. - Cost-conscious investors may prefer VGIT for its lower fees, while those willing to pay a premium for potentially smoother performance might opt for IEI [11].