What is the main difference in bond duration between IEF and VGIT?

The primary distinction lies in the maturity of the underlying US Treasury securities. IEF focuses on 7–10-year notes, which are sensitive to interest rate changes. VGIT targets intermediate-term Treasuries, typically 3–10 years, offering a slightly shorter duration profile. This means IEF may experience larger price swings than VGIT when rates move. Investors should understand that duration is a key risk measure for bond ETFs. Choosing between them depends on your tolerance for volatility and expectations about future interest rates. Longer duration offers potential for higher returns if rates fall, but greater risk if they rise.

How do expense ratios work for ETFs?

An expense ratio is the annual fee charged by a fund to manage your investment, deducted directly from its assets. It covers operating costs like portfolio management and administration. For example, a 0.15% fee means you pay £1.50 annually for every £1,000 invested. Over time, lower fees can enhance net returns, as less money is taken from the fund. However, the expense ratio is just one factor; it does not include trading costs or bid-ask spreads. Comparing fees helps investors understand the cost structure of passive investment vehicles before assessing performance.

How do the expense ratios of IEF and VGIT compare?

VGIT has a significantly lower expense ratio of 0.03%, compared to IEF's 0.15%. This means VGIT costs 0.12 percentage points less annually to hold. Over a long investment horizon, this difference can compound, potentially boosting VGIT's net returns relative to IEF, all else being equal. For every £10,000 invested, VGIT's fee is approximately £3 per year versus £15 for IEF. Investors seeking to minimise cost drag might find VGIT more attractive on this metric. However, lower fees do not guarantee higher returns, as performance also depends on market conditions and fund management.

Which fund has a longer operational history?

IEF has a substantially longer track record, with an inception date of 22 July 2002. This provides over two decades of performance data across various economic cycles. In contrast, VGIT was launched on 19 November 2009, giving it a shorter history of about 16 years as of 2026. A longer history allows investors to assess how a fund has handled different interest rate environments and market stress periods. While past performance does not predict future results, the extensive historical data for IEF offers more visibility into its behaviour over time.

Are the top holdings of IEF and VGIT similar?

No, there is no overlap in the listed top ten holdings between IEF and VGIT, according to available data. This suggests they hold different specific US Treasury securities, likely due to their different maturity focuses (7–10 years for IEF versus 3–10 years for VGIT). While both funds invest in government debt, the distinct portfolios mean they are exposed to different segments of the yield curve. This lack of overlap indicates they are not redundant holdings but rather provide differentiated exposure, potentially allowing them to serve different roles within a diversified fixed-income portfolio.

How do the dividend yields of these funds compare?

IEF currently offers a dividend yield of 4.06%, slightly higher than VGIT's 3.99%. The 0.07 percentage point difference is minimal but may appeal to income-focused investors. These yields reflect the current interest rates on the underlying Treasury securities they hold. Since both funds pay out interest income from these bonds, the yield can change as market rates fluctuate and as the funds roll over maturing bonds. Investors should note that a higher yield does not necessarily indicate better performance, especially if it correlates with higher duration risk in the case of IEF.

What types of investing goals are these funds typically suited for?

IEF, with its focus on 7–10-year Treasuries, is often used by investors seeking to hedge against equity market downturns or to position for potential interest rate declines, accepting higher price volatility for potentially higher total returns. VGIT, targeting intermediate-term bonds, is generally viewed as a core holding for balanced portfolios, offering a moderate sensitivity to rate changes. Its lower fee structure may also attract investors prioritising cost efficiency in their fixed-income allocation. The choice depends on whether the goal is managing duration risk or optimising yield and cost in a mid-term bond sleeve.

Why is fund size and liquidity important for ETFs?

Both IEF and VGIT are large funds, with net assets of $41.9 billion and $39.7 billion respectively. Large asset bases typically support higher trading volumes, which can lead to tighter bid-ask spreads and easier buying and selling of shares without significantly impacting the market price. This liquidity is beneficial for investors who need to access their capital or adjust their positions. However, fund size alone does not guarantee performance; it primarily affects the ease and cost-efficiency of transactions. Investors should still monitor the average daily volume and the spread between the bid and ask prices.

What does 'index tracked: not available' mean for investors?

When specific index details are not available, it means the exact benchmark the fund follows is not publicly listed in this data source. Both IEF and VGIT are index-based ETFs, so they aim to replicate the performance of a defined basket of US Treasury bonds. Without seeing the index, investors rely on the fund's stated category (Long or Intermediate Government) and average maturity to infer the holdings' characteristics. Transparency is important for understanding precise replication methods, but established issuers like iShares and Vanguard generally have robust processes to track their targets closely.

Should investors choose the fund with the lower dividend yield?

Not necessarily. Dividend yield is just one component of total return, which also includes capital appreciation or depreciation. VGIT's lower yield of 3.99% compared to IEF's 4.06% might be offset by its significantly lower expense ratio of 0.03% versus 0.15%, reducing cost drag. Additionally, IEF's longer duration could lead to larger price gains if interest rates fall, boosting its total return. Conversely, if rates rise, IEF might decline more. Investors must weigh yield against fee efficiency and duration risk in the context of their broader goals, not just the headline distribution rate.

How does the 'Long Government' vs 'Intermediate Government' category affect risk?

The categorisation signals different levels of interest rate risk. 'Long Government' (IEF) indicates exposure to bonds with maturities typically around 7–10 years, making its price more volatile when interest rates change. 'Intermediate Government' (VGIT) suggests a mix of 3–10 year maturities, resulting in a slightly lower duration and less price sensitivity. Higher duration means greater potential returns if rates fall, but larger losses if they rise. Investors must assess their risk tolerance and investment horizon. A conservative investor may prefer VGIT's lower volatility, while a more active allocator might use IEF for specific rate-hedge strategies.

Educational disclaimer: What should readers know about this comparison?

This comparison is for educational purposes only and does not constitute financial advice. The data reflects figures available as of 22 September 2026, and characteristics like yield, expense ratios, and holdings can change. Investing in ETFs involves risks, including potential loss of capital. Bond funds are subject to interest rate, credit, and liquidity risks. Past performance is not indicative of future results. Investors should consider their individual financial circumstances, objectives, and risk tolerance, and consult a qualified financial adviser before making any investment decisions. Always read the fund's prospectus and key information documents for full details.

IEF vs VGIT

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

This page compares the iShares 7-10 Year Treasury Bond ETF and the Vanguard Intermediate-Term Treasury ETF. Review fees, holdings, dividends, and how each fund tracks its market. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

IEF

Metric

VGIT

0.15%

Expense Ratio

0.03%

4.06%

Dividend Yield

3.99%

$41.92B

Net Assets

$39.66B

Holdings

104

Jul 22, 2002

Inception Date

Nov 19, 2009

–

Index Tracked

–

Long Government

Fund Category

Intermediate Government

VGIT costs about $12.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

Discover More Comparisons

IEF vs IEI

Compare IEF and IEI on fees, dividends, holdings and tracking. Both have a 0.15% expense ratio, similar yields, and different US Treasury bond duration targets.

IEF vs TLT

Compare IEF and TLT ETFs. Review 0.15% fees, $41.9bn vs $46.7bn assets, and yields. Holdings are not available. Neutral educational overview.

GOVT vs VGIT

Compare GOVT and VGIT ETFs. Review expenses, dividends and holdings. GOVT has 0.05% fee and 3.73% yield. VGIT has 0.03% fee and 3.99% yield.

Investment Analysis

IEF

Pros

Substantial net assets of $41.9 billion support potentially tighter bid-ask spreads for investors.
Over two decades of track record since July 2002 provides a long-term history for this fund.
A dividend yield of 4.06% may appeal to income-focused investors seeking regular cash distributions.

Considerations

The 0.15% expense ratio is higher than many similar government bond exchange-traded funds.
Details regarding the specific index methodology and top holdings are currently not available.
The fund's classification as Long Government suggests a focus that may differ from broader treasury funds.

VGIT

Pros

An exceptionally low expense ratio of 0.03% helps minimise the drag on long-term investor returns.
Net assets of $39.7 billion indicate a large and well-established fund for market participants.
The Intermediate Government category signals a specific focus on medium-term United States Treasury securities.

Considerations

The inception date of November 2009 provides a shorter operational history for the fund to date.
A dividend yield of 3.99% is marginally lower than its primary competitor fund's current yield.
Specific holdings and the tracked index details are not available for direct transparency assessment.

About IEF and VGIT

IEF (IEF)

The iShares 7-10 Year Treasury Bond ETF (IEF) offers investors exposure to medium-term U.S. government bonds. With an average maturity between 7 and 10 years, it sits in the middle of the duration spectrum, aiming to balance income generation with some sensitivity to interest rate movements. As an ETF, it trades on stock exchanges like a share, providing flexibility for buying and selling throughout the trading day. The fund has an expense ratio of 0.15%, which is relatively low for active fixed-income products, though as an index-tracking ETF, costs are managed efficiently. It holds 18 positions, reflecting its focus on specific treasury notes. Investors often use IEF as a component of a diversified portfolio to potentially dampen equity volatility or hedge against economic uncertainty, bearing in mind that bond prices can fluctuate with changes in market interest rates and inflation expectations.

VGIT (VGIT)

The Vanguard Intermediate-Term Treasury ETF (VGIT) is designed to track the performance of a market-weighted index composed of US government bonds with maturities between three and ten years. As an exchange-traded fund, it offers investors exposure to a diversified portfolio of 104 holdings, primarily consisting of fixed-income securities backed by the full faith and credit of the US government. This structure typically aims to provide a balance between yield potential and interest rate risk compared to shorter or longer-term treasury options. With a low expense ratio of 0.03%, it is often used by investors seeking stability and income within a broader portfolio. It is important to remember that while US government bonds are considered low credit risk, their market value can fluctuate based on changes in interest rates. Consequently, returns are not guaranteed, and values may rise or fall over time.

Buy IEF or VGIT in Nemo

🆓

Zero Commission

Trade stocks, ETFs, and more with zero commission. Keep more of your returns.

🔒

Trusted & Regulated

Part of Exinity Group 2015, serving over a million customers globally.

💰

6% Interest on Cash

Earn 6% AER on uninvested cash with daily interest payments.

IEF vs VGIT

Fund Snapshot