Duration Divergence: Comparing VGIT and IEI for Treasury Exposure

Vanguard's VGIT and iShares' IEI both provide access to intermediate-term U.S. Treasuries, but their differing maturity windows result in distinct risk profiles for fixed-income portfolios. While both funds avoid leverage and currency hedging, the structural differences in their holdings create varying levels of rate sensitivity. VGIT spans a broader maturity range of three to 10 years, whereas IEI strictly adheres to a three-to-seven-year window. This difference in duration means VGIT is more sensitive to interest rate movements; it typically experiences greater price appreciation when rates fall but faces steeper declines when rates rise. From a cost and yield perspective, VGIT is the more affordable option, featuring a notably lower expense ratio and a slightly higher dividend yield. Its top holdings include Treasury notes maturing in 2034 and 2035. In contrast, IEI holds 83 issues with top positions maturing between 2029 and 2030, offering a tighter band for those seeking a more predictable fixed-income anchor. The choice between the two depends on the investor's broader portfolio goals. For those using Treasuries as a primary ballast against rate cuts, VGIT's extra duration provides more exposure. For investors already carrying significant equity or long-duration risk, IEI's narrower maturity window offers a cleaner, more stable fit.