Vanguard Total Bond or Fidelity Investment Grade Bond: Which U.S. Bond ETF Offers Better Value
Key Points
Vanguard Total Bond Market ETF offers a significantly lower expense ratio and higher assets under management than Fidelity Investment Grade Bond ETF
Both funds show similar risk profiles with identical beta values and nearly the same five-year maximum drawdowns
The Fidelity offering is more concentrated, with about 850 holdings compared to more than 11,000 for Vanguard
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The choice between Vanguard Total Bond Market ETF (NASDAQ:BND) and Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) hinges on a trade-off between the Vanguard fund's ultra-low costs and the Fidelity fund's higher trailing yield.
Both funds provide core exposure to the U.S. investment-grade bond market, serving as potential ballast for diversified portfolios. While the Vanguard fund tracks a massive, broad-based index of taxable debt, the Fidelity fund offers a curated selection of highly rated instruments designed for stability and consistent income generation.
Snapshot (cost & size)
| Metric | FIGB | BND |
|---|---|---|
| Issuer | Fidelity | Vanguard |
| Expense ratio | 0.36% | 0.03% |
| 1-yr return (as of June 26, 2026) | 4.4% | 4.3% |
| Dividend yield | 4.11% | 3.94% |
| Beta | 0.25 | 0.25 |
| AUM | $498.6 million | $394.4 billion |
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 on June 26.
The Vanguard fund is significantly more affordable for long-term investors, with an expense ratio of 0.03% compared to 0.36% for the Fidelity fund. However, the Fidelity fund provided a slightly higher payout over the trailing 12 months.
Performance & risk comparison
| Metric | FIGB | BND |
|---|---|---|
| Max drawdown (5 yr) | (18.10%) | (17.90%) |
| Growth of $1,000 over 5 years (total return) | $1,008 | $1,002 |
What's inside
Vanguard Total Bond Market ETF provides extensive exposure to the domestic taxable fixed-income market through 11,455 holdings. That portfolio is highly diversified, so no single position exceeds 0.47% of its $394.4 billion in assets under management.
Launched in 2007, the Vanguard fund has a trailing-12-month dividend of $2.90 per share and focuses on providing a reliable stream of income while cushioning against stock market volatility.
Fidelity Investment Grade Bond ETF maintains a tighter portfolio of 857 holdings, primarily consisting of highly rated debt instruments and cash equivalents. Its largest sector holding is U.S. Treasuries, at 48.8% of the portfolio, followed by corporate bonds at 22.3%. Launched in 2021, the Fidelity fund has a trailing-12-month dividend of $1.76 per share.
Which fund is the better buy?
Bond funds are generally defensive holdings, providing investors with diversification and greater stability than stocks, which can be quite volatile.
In that light, the Vanguard Total Bond ETF, BND, is appealing because of its lower maximum drawdown and lighter expense ratio compared to Fidelity’s FIGB. BND is also more heavily invested in U.S. government issuers, at 69% of the portfolio, compared to 62% for the Fidelity Investment Grade Bond ETF. Those are superior defensive metrics for Vanguard.
The FIGB ETF is heavier in BBB-rated debt, at 15.2% of its portfolio, compared to 12.4% for BND. Triple-B debt is riskier and therefore likely to bring better yields. It offsets that risk a bit by holding more AAA-, AA-, and A-rated debt than Vanguard.
Annualized performance is better for the Fidelity fund over the 5-year period at 0.51% to 0.19%, while Vanguard is better in the 3-year lookback, at 3.93% to 3.83%.
The Fidelity fund wins the laurel for performance, given its slightly better 1-year return, but Vanguard’s BND gets the nod here. Given that bonds are defensive holdings and typically long-term, BND’s lower expense ratio and slightly better maximum drawdown earn it the nod here, since those will help returns long-term
For more guidance on ETF investing, check out the full guide at this link.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Total Bond Market ETF. The Motley Fool has a disclosure policy.
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