VGIT vs IEI: The maturity gap that changes your rate exposure

The Vanguard Intermediate-Term Treasury ETF (NASDAQ:VGIT) and iShares 3-7 Year Treasury Bond ETF (NASDAQ:IEI) both focus on U.S. Treasury bonds in the intermediate range, but VGIT features a lower fee and higher assets under management, while IEI delivers a narrower maturity band and marginally better risk-adjusted returns.

Both VGIT and IEI are designed for investors seeking exposure to intermediate-duration U.S. Treasury bonds, offering relative safety and moderate income. This comparison breaks down cost, yield, performance, risk, and portfolio composition to help clarify where each fund fits and which may appeal depending on your preferences.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

VGIT looks more affordable with a notably lower expense ratio, while also offering a slightly higher dividend yield compared to IEI.

Performance & risk comparison

What's inside

IEI tracks U.S. Treasury bonds with maturities between three and seven years, holding 83 issues as of late April 2026. Its top positions are Treasury Note 05/15/2029 (2.96%), Treasury Note 11/30/2030 (2.95%), and Treasury Note 02/28/2030 (2.30%). The fund is nearly two decades old and, as a fixed income ETF, does not break down by equity sector. There are no unique quirks or overlays, so its focus remains on intermediate Treasuries within that specific maturity window.

VGIT also targets U.S. Treasury bonds but spans a slightly broader maturity range (three to 10 years), holding 76 securities. Its largest positions include United States Treasury Note/Bond 4.63% 02/15/2035 (1.96%), 4.38% 05/15/2034 (1.95%), and 4.25% 11/15/2034 (1.91%). Like IEI, VGIT contains only government debt, with no sector or credit surprises, and both ETFs avoid leverage or currency hedging.

What this means for investors

VGIT and IEI are close enough that most investors probably don't think hard about the difference. Both hold only U.S. Treasuries, both skip leverage and currency hedging, and both land in the intermediate space. But the maturity gap matters more than it looks. IEI caps out at seven years; VGIT runs to 10. That extra stretch means VGIT carries more duration — in plain terms, it moves more when rates shift. In a falling-rate environment, that's a tailwind. When rates rise, it hurts more. VGIT also costs less and yields slightly more, so if you're comfortable with that added rate sensitivity, you're being compensated for it, however modestly. IEI's tighter band makes it a cleaner fit if you want intermediate exposure without guessing how far out on the curve you're actually sitting. The right call depends less on which fund looks better on paper and more on where this sits in your broader portfolio. If you're already carrying equity risk or longer-duration bonds elsewhere, IEI's tighter band keeps your fixed income anchor predictable. If Treasuries are doing heavier lifting in your allocation — providing ballast against a rate cut — VGIT's extra duration gives you more of that exposure without leaving government debt entirely.

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Seena Hassouna 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.