The iShares National Muni Bond ETF (MUB) Offers a Broader Bond Mix Than the Vanguard Intermediate-Term Treasury Index ETF (VGIT)
Key Points
VGIT and MUB both manage over $40 billion in assets.
VGIT’s yield is slightly higher, but it has seen a larger drawdown over five years compared to MUB.
MUB holds thousands of municipal bonds, while VGIT sticks to a focused portfolio of U.S. Treasury securities
- 10 stocks we like better than iShares Trust - iShares National Muni Bond ETF ›
The Vanguard Intermediate-Term Treasury ETF (NASDAQ:VGIT) and the iShares National Muni Bond ETF (NYSEMKT:MUB) differ most in their bond exposure: VGIT focuses on Treasuries with a slightly higher yield, while MUB offers broad municipal bond diversification and potential tax advantages.
Both VGIT and MUB target investors seeking moderate income and lower volatility than stocks, but they do so with different types of bonds. This comparison looks at cost, returns, risk, liquidity, and portfolio makeup to help clarify which fund may appeal more, depending on individual tax situations and risk preferences.
Snapshot (cost & size)
| Metric | VGIT | MUB |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.03% | 0.05% |
| 1-yr return (as of 2026-03-24) | 0.5% | 0.1% |
| Dividend yield | 3.8% | 3.2% |
| AUM | $48.8 billion | $42.3 billion |
The 1-yr return represents total return over the trailing 12 months.
VGIT is marginally more affordable with a 0.03% expense ratio compared to MUB’s 0.05%, and it also offers a modestly higher yield. This cost and payout advantage may appeal to investors who prioritize efficiency and income.
Performance & risk comparison
| Metric | VGIT | MUB |
|---|---|---|
| Max drawdown (5 y) | -15.01% | -11.89% |
| Growth of $1,000 over 5 years | $876 | $911 |
While both funds experienced moderate drawdowns over the past five years, VGIT saw a slightly deeper maximum loss. However, MUB’s diversified municipal bond portfolio helped it preserve more capital over the same period, reflected in its higher five-year growth of $1,000.
What's inside
MUB holds more than 6,300 investment-grade municipal bonds, spanning a wide range of U.S. states and agencies. Its top positions include University Tex Univ Revs 08/15/2036, Atlanta Ga Wtr & Waste Wtr Rev 11/01/2040, and New York St Twy Auth St Pers I 03/15/2048, each making up a small fraction of assets. The fund has an 18.5-year track record and provides broad diversification across the municipal bond market.
VGIT, by contrast, concentrates its portfolio in U.S. Treasury notes and bonds, with its largest holdings being United States Treasury Note/Bond 4.38% 05/15/2034, 4.63% 02/15/2035, and 4.00% 02/15/2034. This focus delivers pure government exposure and a simple structure, with 76 holdings and no sector tilts or hidden risks.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Neither of these two bond ETFs looks like an exciting place to park your money. That said, their performance hasn’t been as bad as their price performance alone suggests. If we include dividends paid, MUB produced a 3.7% gain over the past five years. By the same yardstick, the VGIT ETF produced a gain of 0.8% over the past five years.
If you’re in a state with no income tax, a municipal bond fund has a strong advantage over one that generates interest that’s taxable at the federal level, such as VGIT. Interest payments from municipal bonds are generally free from federal taxes.
If stability is a stronger concern than the overall rate of return, VGIT has an advantage. Municipalities can’t print more money to cover a tax revenue shortfall the way the U.S. Government can with treasuries.
Should you buy stock in iShares Trust - iShares National Muni Bond ETF right now?
Before you buy stock in iShares Trust - iShares National Muni Bond ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Trust - iShares National Muni Bond ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $503,861!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,026,987!*
Now, it’s worth noting Stock Advisor’s total average return is 884% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of March 28, 2026.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
