Small Fee Gaps, Big Duration Risk in Corporate and Treasury Bond ETFs

Investors face a choice between modestly higher corporate yields and the lower credit risk of Treasuries when deciding where to park short‑term cash.

Overview

Short‑term iShares IGSB pays about 4.6% versus Schwab SCHO’s 3.9% while charging 0.04% versus 0.03% in fees, and IGSB holds thousands of corporate issues compared with SCHO’s roughly 100 Treasuries.
Long‑term corporate peers Vanguard VCLT and iShares IGLB offer nearly identical exposure with VCLT slightly cheaper at 0.03% versus 0.04% and a marginally higher trailing yield (about 5.5% versus 5.2%).
Both long‑duration corporate ETFs recorded severe five‑year drawdowns of roughly 34%, showing that long maturities sharply increase sensitivity to interest‑rate moves and credit‑spread widening.
Short‑term funds are positioned to deliver steady income and capital preservation, but corporate short‑term funds trade extra credit risk and higher income for greater volatility compared with short‑term Treasuries.
Small expense‑ratio differences can matter over time, yet the bigger practical choice for investors is matching yield, duration risk, holdings diversification and liquidity to their income needs and risk tolerance.