Vanguard BND Offers Broader Bond Mix Than BlackRock's IEI
Key Points
The Vanguard Total Bond Market ETF carries a lower expense ratio and a slightly dividend yield than the iShares 3-7 Year Treasury Bond ETF.
BND holds a much broader range of bonds, while IEI focuses solely on U.S. treasuries.
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Both the iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) and the Vanguard Total Bond Market ETF (NASDAQ:BND) are designed for investors seeking core bond exposure, but their approaches differ: IEI sticks to intermediate-term U.S. Treasuries, while BND covers a more broad spectrum of investment-grade bonds. This comparison highlights how each ETF’s cost, performance, risk, and holdings may appeal to different income and diversification needs.
Snapshot (cost & size)
| Metric | IEI | BND |
|---|---|---|
| Issuer | IShares | Vanguard |
| Expense ratio | 0.15% | 0.03% |
| 1-yr return (as of Feb. 14, 2026) | 4.22% | 4.19% |
| Dividend yield | 3.48% | 3.83% |
| Beta | 0.15 | 0.27 |
| AUM | $18.06 billion | $389.22 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
The Vanguard Total Bond Market ETF stands out for its notably lower expense ratio, making it more affordable for long-term holders, while sharing a very similar one-year return with IEI.
Performance & risk comparison
| Metric | IEI | BND |
|---|---|---|
| Max drawdown (5 y) | -13.89% | -17.91% |
| Growth of $1,000 over 5 years | $902 | $853 |
What's inside
For nearly 20 years, BND has tracked the broad U.S. investment-grade bond market, holding a large basket of 15,000 securities. It is designed for investors seeking balanced exposure across Treasuries, mortgage-backed securities, and investment-grade corporates.
IEI holds 87 positions focused exclusively on U.S. Treasury bonds that mature in three to seven years, providing pure government exposure with minimal credit risk. The fund was created only three months later than BND. Its weight is nearly 100% AA bonds, the second-highest-rated bonds.
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What this means for investors
When deciding between these two ETFs it will essentially come down to if investors prefer more diverse bond exposure or more concentration on U.S. government fixed-income. Both funds have similar one-year returns, but it should be noted that BND’s price has dropped about four percent worse than IEI over the last five years, when looking from a more long-term perspective.
In terms of risk, the two funds nearly balance each other out as IEI has nearly 100% AA-rated bonds, which are all federally issued; while BND has 72% in AAA-rated bonds. So even though IEI doesn’t have AAA-rated bonds, it holds the second best there is to offer, and while BND holds some A and BBB-rated bonds, the AAA bonds make up for it.
What’s interesting is that although BND has a higher dividend yield percentage, IEI’s actual monthly dividend payouts are nearly twice as high because the BlackRock fund has a price of $120.14 compared to the Vanguard fund’s price of $74.88 (as of Feb. 14, 2026).
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Adé Hennis has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.
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