What is the yield curve and why does the 7-10 year segment matter?

The U.S. Treasury yield curve plots the yields of Treasury securities at different maturities — from overnight T-Bills to 30-year T-Bonds. Normal yield curve shape: short-term rates lower than long-term rates; investors demand higher yields for lending money for longer periods (compensating for time and uncertainty). Yield curve dynamics: steepening — short rates fall relative to long rates (typical in economic slowdowns when the Fed cuts rates); flattening — short rates rise toward long rates (typical in tightening cycles when the Fed raises rates); inverted — short rates exceed long rates (inverted yield curve historically precedes recessions as short-term rate expectations exceed long-term growth expectations; 2022-2023 was one of the longest yield curve inversions in history). The 7-10 year segment's significance: the 10-year Treasury yield is the world's most widely cited interest rate benchmark — it's the reference rate for 30-year fixed mortgages (mortgage rate = 10-year Treasury + ~170 bps), corporate bond pricing, and economic expectations; the 7-10 year range includes the key 10-year benchmark; IEF's focus on this range makes it a direct play on the 10-year yield, which is why IEF is so widely used for duration hedging.

When do Treasury bond ETFs like IEF and VGIT outperform and when do they underperform?

Treasury ETF outperformance scenarios: Equity market selloffs and 'risk-off' events — Treasuries are the global flight-to-safety asset; when equities fall sharply (2008, March 2020 COVID), investors sell equities and buy Treasuries, driving yields down and IEF/VGIT prices up; this negative correlation is the primary diversification benefit of Treasury bonds in a portfolio. Federal Reserve rate cuts — the Fed sets short-term rates; when the Fed signals or executes rate cuts, the entire yield curve typically declines, driving all Treasury prices higher. Recession and deflation expectations — in recessions, growth expectations fall and inflation declines; lower growth and inflation expectations reduce long-term interest rate expectations, supporting Treasury prices. Treasury ETF underperformance scenarios: Rising interest rate environments — the 2022 rate hiking cycle drove IEF down approximately 15-18%; even high-quality Treasuries lose significant value when yields rise. Inflation surprises — unexpected inflation reduces the real return of fixed-rate Treasuries; the 2021-2022 inflation surge drove Treasury yields dramatically higher and prices lower. 'Risk-on' rallies — when equities surge, investors rotate from Treasuries into risk assets; Treasury prices decline as yields rise due to reduced safe-haven demand.

How do IEF and VGIT compare to other bond ETFs for portfolio construction?

Bond ETF ecosystem for portfolio construction: Comparing IEF and VGIT to alternative bond ETFs: Treasury short-term (VGSH, SHY) — 1-3 year Treasuries; much lower duration (~2 years), lower yield, extremely low risk; appropriate for near-term capital preservation. Treasury intermediate (VGIT, IEF) — 3-10 year range; moderate duration (~5-8 years); core portfolio fixed income role. Treasury long-term (VGLT, TLT) — 10-30 year Treasuries; very high duration (~15-18 years); maximum interest rate risk and return potential; used for long-duration liabilities or speculative rate views. Corporate bonds (VCIT, IGIB) — same intermediate maturity but with corporate credit risk (BBB+ average); higher yield than Treasuries due to credit spread; more appropriate for income-focused investors accepting credit risk. Total bond market (BND, AGG) — diversified blend of Treasuries, agency bonds, corporate bonds, and mortgage-backed securities; moderate credit quality and intermediate duration; most commonly used for balanced portfolio bond allocation. TIPS (VTIP, TIP) — inflation-protected Treasuries; appropriate when inflation is a concern; real yield instead of nominal yield. IEF and VGIT occupy the credit-risk-free, intermediate-duration niche — they're chosen when investors want pure rate exposure without credit risk, which makes them ideal for the 'safe' portion of a balanced portfolio's fixed income allocation.

brimindinvest.com / compare / ief-vs-vgit-compareLIVE

IEF

iShares 7-10 Year Treasury Bond ETF (IEF) · ETF - U.S. Treasury Bonds

$94.36

+1.68% this month

VERSUS

⟷

COMPARE

VGIT

Vanguard Intermediate-Term Treasury ETF (VGIT) · ETF - U.S. Treasury Bonds

$58.84

+0.98% this month

Scoreboard verdict

Across expense ratio, momentum, yield, fund size, risk

IEF

2

VGIT

3

VGIT LEADS 3/5

Comparison scoreboard

VGIT LEADS 3/5

Exp. Ratio

IEF 0.15%

VGIT ✓0.03%

1Y Return

IEF ✓+3.70%

VGIT +3.28%

Div. Yield

IEF ✓3.87%

VGIT 3.84%

AUM

IEF $48.32B

VGIT ✓$49.45B

Beta

IEF 0.26

VGIT ✓0.16

Metrics last refreshed: 6/20/2026

Quick take

IEF vs VGIT ETF Comparison: AI Score, Valuation, Performance and Upside

IEF and VGIT are both high-quality intermediate-term U.S. Treasury bond ETFs from iShares and Vanguard respectively, providing portfolio safety during equity stress and zero credit risk. The primary differences are maturity range (IEF focuses on 7-10 years; VGIT covers 3-10 years, resulting in slightly shorter average duration), expense ratio (VGIT edges IEF on cost), and institutional liquidity (IEF is more widely traded with an active options market). Both are core fixed income ETFs for portfolio construction.

IEF vs VGIT is narrower, more liquid 7-10 year Treasury ETF used extensively in institutional hedging strategies (iShares IEF with active options market and enormous trading volume providing pure 7-10 year rate exposure) versus slightly broader 3-10 year Treasury exposure with Vanguard's cost efficiency (Vanguard VGIT covering a wider maturity spectrum with lower average duration and lower expense ratio) — institutional liquidity and precise duration targeting versus cost efficiency and maturity breadth.

Live analysis · updated 6/20/2026

VGIT holds the edge across 3 of 5 key metrics in this comparison. IEF has delivered stronger 1-year price return (+3.70% vs +3.28% for VGIT).

Normalized 1Y performance

IEF

VGIT

Recent returns

IEF

VGIT

Who should consider this stock?

IEF may suit investors who:

→Need institutional-level liquidity and an active options market for fixed income hedging, duration overlay strategies, or large-block Treasury trades where IEF's trading depth is essential
→Want focused 7-10 year duration exposure for precise interest rate risk management — IEF's narrow maturity range creates more predictable duration characteristics than VGIT's broader 3-10 year range
→Use iShares ETFs across asset classes and value iShares' consistent Treasury ETF suite (SHY, IEI, IEF, TLH, TLT) covering the complete yield curve

VGIT may suit investors who:

→Value Vanguard's cost minimization and maintain Vanguard portfolios where VGIT's slightly lower expense ratio is preferred over IEF's marginal cost difference
→Want intermediate Treasury exposure with slightly shorter duration than IEF — VGIT's 3-10 year range results in lower average duration than IEF's 7-10 year focus, reducing interest rate sensitivity
→Use Vanguard's Treasury ladder (VGSH + VGIT + VGLT) for comprehensive Treasury curve exposure and prefer consistent Vanguard family coverage

Performance & AI score

Metric	IEF	VGIT
ETF score	43.0	49.0
Latest close	$94.36	$58.84
1M return	+1.68%	+0.98%
6M return	-0.33%	-0.21%
1Y return	+3.70%	+3.28%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

Period	IEF	VGIT
1Y ago	$10.78K (+7.8%) started 2025-06-18	$10.74K (+7.4%) started 2025-06-18
5Y ago	$10.97K (+9.7%) started 2021-06-18	$11.77K (+17.7%) started 2021-06-18
10Y ago	$13.77K (+37.7%) started 2016-06-20	$14.87K (+48.7%) started 2016-06-20

Hypothetical — past performance does not guarantee future results.

Fund characteristics

Metric	IEF	VGIT
Expense ratio	0.15%	0.03%
Total assets (AUM)	$48.32B	$49.45B
Dividend yield	3.87%	3.84%
Trailing P/E	N/A	N/A
Beta	0.26	0.16
52-week change	3.70%	3.28%

Risk & fund metrics

Metric	IEF	VGIT
1Y return	+3.70%	+3.28%
6M return	-0.33%	-0.21%
1M return	+1.68%	+0.98%
1Y Sharpe ratio	-0.16	-0.36
Beta	0.26	0.16
Dividend yield	3.87%	3.84%
5Y CAGR	-1.19%	+0.11%

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

IEF max drawdown4.07%

VGIT max drawdown2.83%

IEF max wkly drop1.53%

VGIT max wkly drop1.07%

5Y risk snapshot

IEF max drawdown21.40%

VGIT max drawdown15.02%

IEF max wkly drop3.96%

VGIT max wkly drop2.90%

10Y risk snapshot

IEF max drawdown23.92%

VGIT max drawdown16.05%

IEF max wkly drop3.96%

VGIT max wkly drop2.90%

Performance metrics by period

Period	Metric	IEF	VGIT
1Y	Growth	+3.70%	+3.28%
	CAGR	+3.70%	+3.28%
	Sharpe ratio	-0.16	-0.36
	Max drawdown	4.07%	2.83%
	Max daily drop	0.90%	0.59%
	Max wkly drop	1.53%	1.07%
5Y	Growth	-5.83%	+0.53%
	CAGR	-1.19%	+0.11%
	Sharpe ratio	-0.70	-0.79
	Max drawdown	21.40%	15.02%
	Max daily drop	1.78%	1.29%
	Max wkly drop	3.96%	2.90%
10Y	Growth	+6.59%	+12.89%
	CAGR	+0.64%	+1.22%
	Sharpe ratio	-0.55	-0.71
	Max drawdown	23.92%	16.05%
	Max daily drop	2.51%	1.61%
	Max wkly drop	3.96%	2.90%

Fund overview

Category	IEF	VGIT
Fund name	iShares 7-10 Year Treasury Bond ETF	Vanguard Intermediate-Term Treasury Index Fund ETF Shares
Type	ETF	ETF
Expense ratio	0.15%	0.03%
Total assets (AUM)	$48.32B	$49.45B
Dividend yield	3.87%	3.84%

IEF strengths

→Most liquid 7-10 year Treasury ETF with institutional trading depth — IEF's enormous AUM and daily trading volume make it the most liquid intermediate-long Treasury ETF; options on IEF are also actively traded for fixed income derivatives strategies
→Zero credit risk as direct U.S. government obligations — IEF holds only U.S. Treasury bonds; there is no default risk, no credit analysis required; Treasury bonds are considered the global risk-free rate benchmark
→Negative correlation with equities during market stress provides portfolio insurance — U.S. Treasuries typically rally (prices rise, yields fall) when equity markets sell off severely; IEF provides portfolio diversification during equity bear markets

VGIT strengths

→Broader 3-10 year maturity range provides slightly less duration sensitivity than IEF — VGIT's inclusion of 3-7 year Treasuries alongside 7-10 year bonds results in shorter average duration than IEF; this is advantageous when investors want intermediate exposure with slightly less rate risk
→Vanguard's ultra-low expense ratio minimization — VGIT benefits from Vanguard's ongoing fee reduction; Vanguard's intermediate Treasury ETF competes directly with IEF on cost
→Vanguard Intermediate Treasury suite compatibility — VGIT pairs naturally with VGSH (3 month-3 year) and VGLT (10+ year) for complete Treasury curve coverage in a Vanguard portfolio

Risks to watch — IEF

→Interest rate risk is the dominant risk — IEF's 7-10 year maturity range creates approximately 7-8 years of duration; each 1% rate increase reduces IEF's price by approximately 7-8%; rising rate environments can cause significant capital losses
→Lower yield than corporate bonds — Treasury bonds' safety premium means yields are lower than equivalent maturity corporate bonds; in environments where corporate spreads are tight, the yield sacrifice for Treasuries' safety is substantial
→Concentration in the 7-10 year maturity bucket — IEF's narrow 7-10 year focus means the fund has a specific duration characteristic that may be more or less appropriate depending on portfolio construction needs; VGIT's broader 3-10 year range provides more flexibility

Risks to watch — VGIT

→Less liquid than IEF for institutional applications — IEF has significantly more trading volume and is more widely used in institutional Treasury hedging strategies; for fixed income derivatives and overlay strategies, IEF's options market and institutional liquidity are advantages
→The 3-10 year range makes VGIT overlap with both short and long Treasury ETFs — VGIT's broad range means it partially overlaps with shorter-term bond ETFs (VGSH) and the lower end of long-term funds; some investors prefer the cleaner focus of IEF's 7-10 year niche
→Same interest rate risk as IEF (though slightly lower duration) — VGIT's duration is somewhat less than IEF's, but both ETFs will decline significantly in rising rate environments

Frequently asked questions

U.S. Treasury bonds (Treasuries) are debt obligations issued by the U.S. Department of the Treasury to finance government spending. Treasury security types by maturity: T-Bills — 4 weeks to 1 year; T-Notes — 2 to 10 years (what IEF and VGIT primarily hold); T-Bonds — 20-30 years; TIPS (Treasury Inflation-Protected Securities) — inflation-adjusted principal. Why Treasuries are considered risk-free: the U.S. government has the legal authority to tax U.S. citizens and businesses, providing perpetual income to service debt; the Federal Reserve can create U.S. dollars if necessary; the U.S. has never defaulted on dollar-denominated Treasury obligations (the 2011 debt ceiling debate came close but was resolved before actual default); the U.S. dollar is the world's reserve currency, ensuring global demand for Treasuries. Treasury yields as the risk-free rate: all other fixed income assets are priced relative to Treasuries; corporate bond yields = Treasury yield + credit spread; mortgage rates = Treasury yield + mortgage spread; this makes Treasury yields the foundation of all fixed income pricing globally. Credit risk: essentially zero for nominally-denominated Treasuries; interest rate risk remains significant despite zero credit risk.

AI Prediction SignalNext 5 trading days

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IEF

+2.8%BUY

VGIT

+1.1%HOLD

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