iShares National Muni Bond ETF Offers Broader Bond Mix Than Vanguard Treasury ETF

Comparison of portfolio diversity, bond types, and tax benefits between two major fixed-income ETFs.

Mar. 28, 2026 at 2:52pm

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The Vanguard Intermediate-Term Treasury ETF (VGIT) and the iShares National Muni Bond ETF (MUB) differ in their bond exposure, with VGIT focused on Treasuries and MUB offering broader municipal bond diversification. Both target moderate income and lower volatility, but have tradeoffs in cost, returns, risk, and tax advantages.

Why it matters

Investors seeking fixed-income exposure must weigh factors like cost, yield, risk, and tax implications when choosing between government-backed Treasuries or diversified municipal bonds. The choice depends on individual tax situations and risk preferences.

The details

VGIT has a slightly lower 0.03% expense ratio compared to MUB's 0.05%, and offers a modestly higher 3.8% dividend yield versus MUB's 3.2%. However, MUB's diversified municipal bond portfolio helped it preserve more capital over the past 5 years, with a maximum drawdown of -11.89% versus VGIT's -15.01%. MUB holds over 6,300 investment-grade municipal bonds across the U.S., while VGIT concentrates on 76 U.S. Treasury notes and bonds.

  • The performance data is as of March 24, 2026.

The players

Vanguard

The issuer of the Vanguard Intermediate-Term Treasury ETF (VGIT).

iShares

The issuer of the iShares National Muni Bond ETF (MUB).

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What they’re saying

“Neither of these two bond ETFs looks like an exciting place to park your money. That said, their performance hasn't been as bad as their price performance alone suggests.”

— Cory Renauer, Author

What’s next

Investors should carefully consider their individual tax situations and risk preferences when deciding between the government-backed Treasuries of VGIT or the diversified municipal bonds of MUB.

The takeaway

For investors seeking moderate income and lower volatility, the choice between VGIT and MUB comes down to tradeoffs in cost, yield, risk, and tax advantages. MUB's broader municipal bond diversification may appeal to those in high-tax states, while VGIT's focus on Treasuries could suit investors prioritizing stability over maximum returns.