VCIT Offers Broader Diversification Than FIGB

Core Viewpoint - The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) offers lower costs, stronger recent returns, and greater scale compared to the Fidelity Investment Grade Bond ETF (FIGB), which has shown slightly less volatility over the past five years [1][2]. Cost and Size Comparison - VCIT has an expense ratio of 0.03%, significantly lower than FIGB's 0.36% [3][4]. - As of March 11, 2026, VCIT's one-year return is 7.4%, while FIGB's is 4.9% [3]. - VCIT has a dividend yield of 4.7%, compared to FIGB's 4.1% [4]. - VCIT's assets under management (AUM) stand at $68.5 billion, whereas FIGB has $441.0 million [3]. Performance and Risk Comparison - Over the past five years, VCIT experienced a maximum drawdown of -20.6%, while FIGB had a drawdown of -18.1% [5]. - An investment of $1,000 in VCIT would have grown to $1,076 over five years, compared to $1,025 for FIGB [5]. Portfolio Composition - FIGB holds 685 securities, with 13.3% in cash, 47% in intermediate-term bonds, and 31% in long-term government bonds [6]. - VCIT is more diversified with 2,289 securities, primarily in corporate bonds, including major issuers like Meta Platforms, Oracle, and Pfizer [7]. - Over 91% of VCIT's holdings have maturities of five to ten years, with 6% maturing in ten to fifteen years [7]. Investment Implications - The upcoming year may present a favorable opportunity for adding bond funds to portfolios, as stock valuations are high and lower interest rates could enhance bond prices [9]. - While FIGB has a slight advantage in lower drawdown, its significantly higher expense ratio could lead to increased costs for investors over time [10].