IGIB vs VCIT: Market-Wide Corporate Credit or a Narrower Credit Profile

The iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB) and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) differ most on portfolio breadth, recent returns, and volatility, despite sharing a focus on intermediate-term investment-grade U.S. corporate bonds.

Both funds target the same sweet spot for bond investors: high-quality corporate debt with five to 10 years to maturity. The comparison comes down to IGIB’s wider diversification, versus VCIT’s marginally higher yield, lower expense ratio, and stronger recent performance.

Snapshot (cost & size)

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.

VCIT is marginally more affordable with a 0.03% expense ratio, while IGIB charges 0.04%. Yield-seekers may note VCIT’s higher payout, but IGIB’s recent return edge could appeal to those focused on short-term results.

Performance & risk comparison

What's inside

IGIB holds a strikingly broad portfolio, with nearly 3,000 individual bonds and a 19-year track record. Its largest positions include Blk Csh Fnd Treasury Sl Agency (0.51%), Usd Cash (0.24%), and Bank Of America Corp Mtn (0.21%), with a notable tilt toward cash and short-term instruments—Cash & Others make up the entire reported sector allocation. The fund’s lack of quirks makes it a straightforward core bond holding for those seeking broad exposure between five- and ten-year maturities.

VCIT is more concentrated with 343 holdings and a pronounced Financial Services tilt (28%), followed by Cash & Others (12%) and Technology (9%). Top positions include Meta Platforms (NASDAQ:META) 0.31%, Bank of America (NYSE:BAC) 0.28%, and JPMorgan Chase (NYSE:JPM) 0.26%, each at less than 0.4% of assets. VCIT also applies an ESG screen, which could influence sector and issuer exposure compared to a plain-vanilla portfolio.

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What this means for investors

Intermediate-term corporate bonds are bought for reliability, and they only feel “safe” until rates jump or credit gets nervous. IGIB and VCIT sit in the same investment-grade, intermediate-maturity lane, but they get there in different ways. IGIB spreads exposure across thousands of bonds, so no single issuer or pocket of the market can meaningfully dominate results. VCIT holds far fewer bonds and carries clearer sector fingerprints, which makes the portfolio’s credit choices easier to see.

That difference matters most when credit stops trading like a blur. IGIB’s breadth mutes issuer-specific drama and tends to keep returns closer to the market’s average experience. VCIT’s more concentrated mix, especially its heavier exposure to financial issuers, can make spread moves feel more direct. Its ESG screen also shapes the investable universe, which can tilt exposure in ways investors might not notice until the market tightens.

For investors, the real question is how much of the credit market they want to own versus how much of a credit opinion they want embedded in the fund. IGIB reads like a cross-section of investment-grade corporates. VCIT reflects a narrower set of credit decisions that can become more visible when spreads widen and dispersion returns.

Glossary

Expense ratio: The annual fee a fund charges investors, expressed as a percentage of assets under management.
Yield: The income return on an investment, usually shown as a percentage of the investment’s value.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Beta: A measure of an investment's price volatility compared to the overall market, typically the S&P 500.
Drawdown: The percentage decline from a fund’s peak value to its lowest point over a specific period.
AUM (Assets Under Management): The total market value of assets that a fund manages on behalf of investors.
ETF (Exchange-Traded Fund): A fund that trades on stock exchanges and holds a basket of securities, like stocks or bonds.
Diversification: An investment strategy that spreads assets across various securities to reduce risk.
ESG screen: A process that filters investments based on environmental, social, and governance criteria.
Sector allocation: The distribution of a fund’s investments across different industry sectors.
Core bond holding: A foundational bond investment intended to provide stability and income within a portfolio.
Maturity: The length of time until a bond’s principal amount is repaid to investors.

Eric Trie 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.