VGIT Yields Beat MUB as Treasury ETFs Divide Investors
Vanguard Intermediate-Term Treasury ETF offers a 4.00% dividend yield, exceeding the 3.30% payout from iShares National Muni Bond ETF. The cost difference between the two funds is 0.02 percentage points.
The Vanguard Intermediate-Term Treasury ETF pays a 4.00% dividend yield. The iShares National Muni Bond ETF yields 3.30%. This 0.70 percentage point gap drives current investor comparisons. Both funds serve as core fixed-income holdings. They offer distinct tax treatments and risk profiles.
VGIT charges a 0.03% expense ratio. MUB charges 0.05%. VGIT manages $48.3 billion in assets. MUB manages $44.7 billion. VGIT holds 102 positions. MUB holds 7,063 positions. These structural differences influence portfolio diversification and cost efficiency.
Cost and Yield Differ
VGIT costs 0.03% annually to hold. MUB costs 0.05% annually. VGIT pays $2.29 per share in dividends. MUB pays $3.42 per share in dividends. The yield gap favors VGIT by 0.70 points. The expense ratio gap favors VGIT by 0.02 points.
VGIT has a beta of 0.78. MUB has a beta of 0.91. Lower beta indicates lower volatility relative to the market. VGIT offers a 1-year return of -1.00%. MUB offers a 1-year return of -0.02%. MUB shows stronger recent price stability.
Tax Treatment Drives Choice
MUB income is exempt from federal taxes. VGIT income is exempt from state and local taxes. VGIT income remains subject to federal taxes. MUB income remains subject to state taxes. The optimal choice depends on the investor's marginal tax bracket.
High-bracket investors often favor MUB for federal tax savings. Lower-bracket investors may prefer VGIT for higher nominal yields. State tax rates determine the break-even point. Investors must calculate after-tax returns to compare effectively.
Risk Profiles Diverge
MUB had a 5-year max drawdown of 11.9%. VGIT had a 5-year max drawdown of 16.0%. MUB preserved capital better during the recent five-year period. $1,000 invested in MUB grew to $1,008. $1,000 invested in VGIT declined to $983.
VGIT holds U.S. Treasury notes with 3 to 10 year maturities. MUB holds investment-grade municipal bonds. VGIT carries no credit risk from issuers. MUB carries credit risk from state and local entities. Diversification is higher in MUB with 7,063 holdings.
