Long-term bond ETFs like IGLB and VGLT offer different trade-offs between yield, credit risk, and interest rate sensitivity-see how their returns, volatility, and income compare before choosing a fund for your portfolio
For investors seeking steady income and diversification, long-term bond ETFs remain a core option. Two of the most widely held choices-iShares 10+ Year Investment Grade Corporate Bond ETF (IGLB) and Vanguard Long-Term Treasury ETF (VGLT)-offer exposure to bonds with extended maturities, but their underlying holdings and risk profiles differ in ways that can significantly affect both returns and portfolio stability.
IGLB invests in a broad mix of high-quality corporate bonds with maturities over 10 years, while VGLT focuses exclusively on U.S. Treasury securities in the 10- to 25-year range. Both funds have been available since 2009 and are designed for investors willing to accept higher interest rate sensitivity in exchange for potentially greater yield. Yet the differences in credit quality, sector exposure, and historical performance mean that the choice between them is far from trivial.
Comparing Yield, Fees, and Performance
As of July 16, 2026, IGLB traded at $48.91 per share with a 5.40% dividend yield, while VGLT was priced at $53.95 and yielded 4.70%. Both funds are among the lowest-cost options in their category, with expense ratios of 0.04% for IGLB and 0.03% for VGLT. Over the past year, IGLB delivered a total return of 5.10%, outpacing VGLT's 3.90% return for the same period. Over five years, $1,000 invested in IGLB would have grown to $864, compared to $715 for VGLT, reflecting the impact of both yield and price movement.
IGLB's portfolio is highly diversified, holding more than 3,800 investment-grade corporate bonds, with no single issuer accounting for more than 0.29% of assets. VGLT, by contrast, holds just over 100 U.S. Treasury bonds, offering maximum credit safety but less diversification by issuer. Both funds have negligible fees, but the higher yield from IGLB comes with additional credit risk, especially during periods of economic stress.
Risk Profiles and Drawdown History
Long-term bonds are especially sensitive to changes in interest rates, and both IGLB and VGLT have experienced significant price swings in recent years. Over the past five years, VGLT saw a maximum drawdown of 41%, while IGLB's largest decline was 34.1%. These figures highlight the volatility that can come with long-duration fixed income, particularly when rates rise sharply.
VGLT's exclusive focus on U.S. government debt means it carries virtually no credit risk, but its price can be highly volatile when interest rates move. IGLB, while less sensitive to rate changes than VGLT, introduces the possibility of corporate defaults or downgrades, which can become more likely in a recession. For investors, the choice is a trade-off: accept more credit risk for higher yield and potential return, or prioritize safety and accept lower income.
Choosing Based on Portfolio Goals
For those prioritizing income, IGLB's higher yield and stronger recent performance may be appealing, but it is important to recognize the added risk of corporate bond exposure. Investors who want the highest level of credit safety, even at the cost of lower yield and greater interest rate sensitivity, may prefer VGLT. Both funds can play a role in a diversified portfolio, but their differences are material when it comes to risk tolerance and investment objectives.
When evaluating long-term bond funds, it's also worth considering how much income you'll need in retirement and how bond volatility could affect your withdrawal strategy. For a broader look at how Americans are planning for retirement and the amounts they believe are necessary, see this analysis of how much couples expect to need to retire comfortably in each state.
Bond ETFs like IGLB and VGLT are subject to both interest rate risk and, in the case of corporate bonds, credit risk. Interest rate risk refers to the potential for bond prices to fall when rates rise, which is especially pronounced for long-duration funds. Credit risk is the chance that a bond issuer will default or be downgraded, affecting the value of corporate bond funds. Investors should weigh these risks against their own time horizon, income needs, and risk tolerance before choosing a fund. While past performance can inform expectations, future returns will depend on the path of interest rates, credit conditions, and the broader economic environment.
