Which Is the Better Bond ETF, Vanguard's VCIT or Fidelity's FIGB?
Key Points
The Vanguard Intermediate-Term Corporate Bond ETF offers a significantly lower expense ratio of 0.03% and a higher dividend yield than the Fidelity Investment Grade Bond ETF.
The Vanguard Intermediate-Term Corporate Bond ETF maintains much larger assets under management at $66.4 billion compared to the $464.9 million held by the Fidelity Investment Grade Bond ETF.
The Fidelity Investment Grade Bond ETF has demonstrated a lower beta and a shallower maximum drawdown over the tracked period compared to the Vanguard Intermediate-Term Corporate Bond ETF.
- 10 stocks we like better than Fidelity Merrimack Street Trust - Fidelity Investment Grade Bond ETF ›
The choice between the Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) and Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) hinges on factors such as whether an investor seeks the lowest possible fees or a diversified multi-sector approach to high-quality debt.
Investors looking for stable income often turn to investment-grade debt to balance equity risk. While both ETFs focus on high-quality bonds, they offer different internal compositions and fee structures. This comparison examines how the corporate-only focus of VCIT compares against the broader mandate found within the Fidelity fund.
Snapshot (cost & size)
| Metric | VCIT | FIGB |
|---|---|---|
| Issuer | Vanguard | Fidelity |
| Expense ratio | 0.03% | 0.36% |
| 1-yr return (as of May 11, 2026) | 7.20% | 5.10% |
| Dividend yield | 4.80% | 4.10% |
| Beta | 0.34 | 0.25 |
| AUM | $66.4 billion | $464.9 million |
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. Dividend yield is the trailing-12-month distribution yield.
Cost is a key differentiator here, as the Vanguard fund operates with a razor-thin expense ratio of 0.03%. The Fidelity fund is notably more expensive at 0.36%. For income-seekers, the Vanguard fund also provided a higher trailing-12-month dividend yield of 4.80% relative to the 4.10% offered by the Fidelity fund.
Performance & risk comparison
| Metric | VCIT | FIGB |
|---|---|---|
| Max drawdown (5 yr) | (20.60%) | (18.10%) |
| Growth of $1,000 over 5 years (total return) | $1,076 | $1,023 |
What's inside
The Fidelity Investment Grade Bond ETF provides exposure to a variety of high-grade bond sectors, including corporate and government debt. U.S. Treasury bonds are its largest position with government debt comprising 45.17% of the fund. This ETF holds 180 total issues and was launched in 2021. It has a trailing-12-month dividend of $1.77 per share.
In contrast, the Vanguard Intermediate-Term Corporate Bond ETF focuses exclusively on investment-grade corporate bonds. Its portfolio is highly diversified across 343 holdings, and no single position exceeds 0.31% of the assets. This ETF was launched in 2009 and has a trailing-12-month dividend of $3.94 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in bonds is a great way to diversify a portfolio, provide reliable income and preserve capital. The Fidelity Investment Grade Bond ETF (FIGB) and Vanguard Intermediate-Term Corporate Bond ETF (VCIT) offer these benefits, but choosing between them comes down to a few key considerations.
VCIT costs substantially less, offers a superior dividend yield, and delivered a higher one-year return. It also sports a far larger AUM, providing excellent liquidity. However, one important factor to consider is its focus on corporate bonds.
While VCIT’s holdings are investment grade, 47% of the fund is comprised of BBB-rated bonds. These carry far greater risk than FIGB’s government-focused debt.
FIGB may lack the qualities that make VCIT a compelling fund, but it offers investors far greater stability and reduced risk. This can be seen in its lower beta and max drawdown.
As a result, FIGB is the better choice for investors who prioritize reliability and low risk. VCIT, meanwhile, is for those who want to maximize yield in a low-cost, set-it-and-forget-it ETF.
Should you buy stock in Fidelity Merrimack Street Trust - Fidelity Investment Grade Bond ETF right now?
Before you buy stock in Fidelity Merrimack Street Trust - Fidelity Investment Grade 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 Fidelity Merrimack Street Trust - Fidelity Investment Grade 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 $469,293!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,332!*
Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 207% 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 May 18, 2026.
Robert Izquierdo 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
