Vanguard's VCIT Delivers More Income Than VGIT, But Is the Credit Risk Worth It?

Explore how these two low-cost bond ETFs balance income potential with varying levels of credit and downside risk for investors.

Published on Feb. 7, 2026

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The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and the Vanguard Intermediate-Term Treasury ETF (VGIT) both offer low-cost exposure to intermediate-term bonds, but they differ in their approach. VCIT invests in investment-grade corporate debt, delivering a higher yield of 4.6% but taking on more credit risk. VGIT focuses exclusively on U.S. Treasuries, offering a lower yield of 3.7% but ironclad safety.

Why it matters

Investors must weigh the tradeoff between income potential and downside risk when choosing between these two bond ETFs. VCIT's corporate credit exposure can boost returns, but also increases the chance of losses during market downturns. VGIT's Treasury-only approach provides more stability, but sacrifices some yield.

The details

VCIT invests in a broad mix of high-quality, investment-grade corporate bonds from companies like Meta, Bank of America, and various utilities. VGIT sticks exclusively to U.S. Treasury securities. Over the past year, VCIT returned 8.8% with a 4.6% yield, while VGIT returned 6.6% with a 3.7% yield. However, VCIT has also experienced a larger maximum drawdown of 20.56% compared to 15.04% for VGIT during periods of market volatility.

  • The data in this article is current as of January 30, 2026.

The players

Vanguard

The issuer of both the VCIT and VGIT ETFs.

Meta Platforms

One of the top holdings in the VCIT portfolio.

Bank of America

One of the top holdings in the VCIT portfolio.

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The takeaway

Investors must carefully consider their risk tolerance and income needs when choosing between VCIT and VGIT. VCIT's corporate credit exposure can boost returns, but also increases the chance of losses during market downturns. VGIT's Treasury-only approach provides more stability, but sacrifices some yield.