IGIB Offers Broader Bond Exposure Than FIGB

The iShares 5-10 Year Investment Grade Corporate Bond ETF (NASDAQ:IGIB) stands out for its low fees and broader bond diversification, while the Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) offers a more concentrated portfolio with a heavier cash and Treasury focus.

Both IGIB and FIGB aim to provide investors with exposure to high-quality U.S. bonds, but they take different approaches in portfolio size, sector allocation, and cost. This comparison highlights where each fund may appeal, depending on investor priorities around expenses, risk, and portfolio makeup.

Snapshot (cost & size)

The 1-yr return represents total return over the trailing 12 months.

IGIB is notably more affordable, with a 0.04% expense ratio compared to FIGB’s 0.36%. IGIB also offers a higher dividend yield, which may appeal to income-focused investors seeking a larger payout from their bond allocation.

Performance & risk comparison

What's inside

FIGB is a core fixed-income ETF that targets a mix of U.S. high-grade bond sectors. The fund holds 180 securities, with its largest allocations in Cash Cf (9.78%), USTB 4.75% 08/15/55 (3.35%), and USTN 4.25% 08/15/35 (3.27%). FIGB’s portfolio is much smaller and more concentrated compared to some peers, and the fund has been around for just over five years.

IGIB, by contrast, is far more diversified, holding nearly 3,000 investment-grade corporate bonds. Its top positions include 10-year corporate bonds with each issue at less than 0.25% of assets. IGIB’s focus remains on U.S. corporate bonds with maturities between five and ten years, and it does not display any unusual portfolio quirks.

Both IGIB and FIGB provide investment-grade bond exposure, but IGIB’s larger asset base and broader diversification may appeal to investors seeking stability and liquidity, while FIGB’s concentrated approach could suit those preferring a heavier allocation to cash and Treasuries.

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What this means for investors

Corporate bond investing is inherently riskier than investing in treasuries because businesses can’t print their own currency. There’s supposed to be a financial trade-off for that extra risk, but you wouldn’t know it by comparing five-year returns from these two ETFs.

Over the past five years, the corporate bond-focused IGIB has returned $84 for every $1,000 invested. That works out to an 1.63% annual growth rate. The FGIB, which has 43.98% of its portfolio in government-backed securities, has returned just $24 for every $1,000 invested over the same time frame.

Investors looking for dividend income might be better off with the IGIB ETF. It’s dividend has risen by 37.3% over the past three years. Over the same time frame, the FGIB ETF lowered its payout by 6.8%. If the IGIB ETF repeats the dividend payments it made over the past 12 months, investors will who buy at recent prices will receive a 4.7% yield. DIvidend payments from the FGIB ETF have been less predictable. A repeat of the past 12 months would produce a 4.1% yeld.

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.