Which Bond ETF Is the Better Buy: Fidelity's FIGB or iShares' Tax-Exempt MUB?
Key Points
Fidelity Investment Grade Bond ETF provides a higher trailing-12-month distribution yield than iShares National Muni Bond ETF.
iShares National Muni Bond ETF maintains a much lower expense ratio of 0.05% compared to 0.36% for the Fidelity fund.
The Fidelity fund manages a more concentrated portfolio of 180 holdings compared to the nearly 7,000 bonds held by the iShares fund.
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Investors comparing Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) and iShares National Muni Bond ETF (NYSEMKT:MUB) may find the former's higher yield potential attractive, while the latter offers tax-exempt income and lower fees.
Both funds provide exposure to investment-grade debt, but they target different segments of the fixed income market. While the Fidelity fund focuses on a broad range of highly rated taxable bonds, the iShares fund specializes in high-quality municipal bonds issued across the United States.
Snapshot (cost & size)
| Metric | MUB | FIGB |
|---|---|---|
| Issuer | iShares | Fidelity |
| Share price | $106.16 (as of 2026-08-13) | $42.42 (as of 2026-08-13) |
| Expense ratio | 0.05% | 0.36% |
| 1-yr return (as of 2026-08-13) | 5.2% | 2.3% |
| Dividend yield | 3.2% | 4.1% |
| Beta | 0.24 | 0.25 |
| AUM | $45.8 billion | $0.5 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is the more affordable option, charging just 0.05% in annual fees. The Fidelity fund is notably more expensive at 0.36%, but it compensates for that cost with a higher trailing payout.
Performance & risk comparison
| Metric | MUB | FIGB |
|---|---|---|
| Max drawdown (5 yr) | (11.5%) | (18.1%) |
| Growth of $1,000 over 5 years (total return) | $1,033 | $995 |
What's inside
Fidelity Investment Grade Bond ETF holds a portfolio of 180 holdings, primarily consisting of highly rated debt and cash equivalents. Launched in 2021. Fidelity Investment Grade Bond ETF has paid $1.75 per share over the trailing 12 months, which on its recent ~$42.4 share price works out to a 4.1% yield.
The iShares National Muni Bond ETF provides deep diversification with 6,984 holdings, primarily high-quality municipal bonds. The fund is highly diversified -- no single position exceeds 0.39% of the portfolio. Launched in 2007. iShares National Muni Bond ETF has paid $3.41 per share over the trailing 12 months, which on its recent ~$106.2 share price works out to a 3.2% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
This choice starts with a question that too few bond investors think to ask: Where are you holding this fund, and what is your tax bracket? The answer changes everything about which fund makes more sense.
FIGB's yield is higher than MUB's on paper, and its active management gives it flexibility to navigate shifting interest rate environments across government, corporate, and foreign bonds. For investors holding bonds inside a retirement account, that higher yield and active oversight make FIGB a reasonable core fixed-income choice. Tax exemption provides no advantage inside an IRA or 401(k), which levels the playing field.
The calculation flips for investors holding bonds in a taxable brokerage account with a higher tax bracket. MUB's municipal bond income is generally exempt from federal taxes, meaning higher-bracket investors keep a larger share of every dollar distributed. That tax advantage can close or eliminate the yield gap between the two funds entirely.
MUB also charges a fraction of what FIGB does and manages dramatically more assets, giving it deeper liquidity. For higher-bracket taxable account investors, MUB is the stronger choice. For those in retirement accounts or lower brackets, FIGB's active management and higher yield make it the more practical option.
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Sara Appino 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.
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