Vanguard’s VCIT Offers Higher Yield and Lower Fees Than iShares’ IEI

Overview

• VCIT’s trailing-12-month distribution yield is about 4.90% compared with IEI’s 3.70%, giving VCIT roughly a 1.19 percentage-point income advantage.
• The Vanguard fund charges a 0.03% expense ratio versus IEI’s 0.15%, which increases VCIT’s after-fee return on income-focused allocations.
• VCIT holds roughly 343 investment-grade corporate bonds and tracks the Bloomberg U.S. 5–10 Year Corporate Bond Index, which means its returns depend on corporate credit spreads and issuer health.
• IEI holds about 83 U.S. Treasury securities with three- to seven-year remaining maturities, so it delivers steadier, government-backed exposure and lower sensitivity to economic cycles.
• For investors, the choice is a tradeoff between higher income from corporate credit at the cost of more default and cycle risk versus lower, steadier income from Treasuries; this decision will affect portfolio volatility and income needs.