If you're looking for the best intermediate Treasury ETF to anchor your bond portfolio, here's the quick takeaway:

  • VGIT (Vanguard Intermediate-Term Treasury ETF): Best for cost-conscious investors, with an ultra-low expense ratio of 0.03% and a balanced 4.9-year duration. It offers solid performance and liquidity, making it a versatile choice.
  • SCHR (Schwab Intermediate-Term U.S. Treasury ETF): Ideal for income-focused investors, matching VGIT's expense ratio but offering a slightly higher yield (3.77%). However, its smaller $11.91 billion asset base may lead to wider trading spreads in volatile markets.
  • IEF (iShares 7-10 Year Treasury Bond ETF): Suited for those seeking higher returns and willing to accept more risk. With a longer 5.7-year duration and a 3.88% yield, it’s sensitive to interest rate changes but provides strong liquidity.

Quick Comparison

ETF Expense Ratio Assets Under Management Average Duration 30-Day SEC Yield 1-Year Return
VGIT 0.03% $42.86B 4.9 years 3.76% 6.79%
SCHR 0.03% $11.91B 4.9 years 3.77% 7.00%
IEF 0.15% $40.87B 5.7 years 3.88% 7.68%

Key Takeaways:

  • VGIT is the most cost-efficient with strong liquidity, making it a top pick for most investors.
  • SCHR offers slightly higher income for those prioritizing yield but has a smaller asset base.
  • IEF delivers the highest yield and return potential but comes with increased risk and higher fees.

Choose based on your goals: lower costs (VGIT), higher income (SCHR), or potential for higher returns with more risk (IEF).

The 10 Best Treasury Bond ETFs (2 From Vanguard) for 2025

Vanguard

IEF: iShares 7-10 Year Treasury Bond ETF

The iShares 7-10 Year Treasury Bond ETF (IEF) provides targeted exposure to U.S. Treasury bonds with maturities ranging from 7 to 10 years. Managed by BlackRock's iShares division, this ETF has earned a reputation as a go-to choice for both institutional and retail investors seeking moderate-duration Treasury exposure and strong liquidity.

Fund Details

IEF tracks the ICE BofA U.S. Treasury 7-10 Year Index, offering passive exposure to this specific segment of the Treasury yield curve. Its portfolio is exclusively composed of bonds with maturities between 7 and 10 years.

As of November 2025, IEF oversees assets totaling $40.87 billion, making it one of the largest Treasury-focused ETFs available. This scale ensures excellent liquidity and narrow trading spreads, which are particularly valuable during periods of market volatility. The fund's size also reflects its widespread adoption by institutional investors looking to build core fixed-income allocations.

Currently, IEF trades at approximately $96.60 per share. Key metrics such as yield, duration, and volatility further shape its investment profile.

Performance Metrics

IEF charges a 0.15% expense ratio. While competitive for an actively traded ETF, this fee is slightly higher than some other options in the intermediate Treasury category.

The fund delivers a 30-day SEC yield of around 3.75%, offering a solid income stream in today’s interest rate environment. This yield reflects the interest payments from its underlying Treasury holdings, adjusted for fund expenses.

With an average duration of approximately 7.85 years, IEF has moderate sensitivity to changes in interest rates. In practical terms, a 1% shift in interest rates would result in an approximate 7.85% price movement in the opposite direction. Additionally, the fund's 12-month standard deviation of 7.56% aligns with what investors expect from intermediate-term Treasury bonds.

Advantages and Drawbacks

IEF’s strengths lie in its liquidity and ability to perform well in certain market conditions. With nearly $41 billion in assets, the fund offers top-tier trading efficiency. This liquidity becomes particularly valuable during times of market stress, allowing investors to quickly adjust their portfolios.

The fund’s focus on 7–10-year Treasuries positions it to benefit from higher yields in rising rate environments while avoiding the heightened interest rate sensitivity of long-term bonds.

However, the 0.15% expense ratio is a potential drawback, especially when compared to lower-cost alternatives. Over time, this higher fee can erode returns, particularly in a low-yield environment where every basis point matters.

IEF’s Sharpe ratio of 1.28 reflects solid risk-adjusted returns but trails some competitors. Additionally, its maximum drawdown of -23.93% highlights the potential for significant short-term losses during adverse market conditions.

"IEF has been a reliable choice for investors looking for exposure to intermediate-term U.S. Treasuries, especially in volatile markets." - Financial Analyst, U.S. News.

While IEF offers a focused approach to intermediate Treasuries, its narrow maturity range limits diversification compared to funds that span a broader spectrum of the bond market.

VGIT: Vanguard Intermediate-Term Treasury ETF

The Vanguard Intermediate-Term Treasury ETF (VGIT) offers investors a low-cost way to access intermediate-term U.S. Treasuries, maintaining steady performance across various market conditions. Managed by Vanguard, it's a reliable option for those looking to balance risk and return in their fixed-income portfolios.

Fund Details

VGIT follows the Bloomberg U.S. Treasury 3-10 Year Index, which includes U.S. Treasury bonds with maturities ranging from 3 to 10 years. This range provides a balanced approach to diversification and duration risk.

As of October 31, 2025, the fund manages $42.86 billion in net assets. Since its inception on November 19, 2009, VGIT has established a solid operational history. Its portfolio consists solely of U.S. Treasury securities, eliminating credit risk while exposing investors to interest rate fluctuations. By focusing on intermediate maturities, the fund strikes a middle ground between short-term stability and long-term yield potential.

Performance Metrics

VGIT stands out for its ultra-low expense ratio of just 0.03%, making it one of the most cost-efficient options in its category. As of November 13, 2025, it boasts a 30-day SEC yield of 3.72% and an average duration of 4.9 years, which indicates moderate interest rate sensitivity.

The fund has delivered year-to-date returns of 6.79% as of November 14, 2025, with a total annual return of 6.97%, including dividends. Its average annual return since inception is 2.24%. During the turbulent interest rate environment of 2022, VGIT declined by 10.67%, performing better than the category average drop of 11.3%. These metrics highlight VGIT's ability to manage risk while delivering consistent returns over time.

Advantages and Drawbacks

VGIT's standout feature is its cost efficiency. With an expense ratio of just 0.03%, investors retain more of their returns - a key advantage, especially in low-yield environments.

"The fund generated solid risk-adjusted performance from its inception in November 2009 through June 2025."
– Zachary Evens, Analyst, Morningstar

The fund's 4-star Morningstar rating reflects its strong performance relative to peers in the Intermediate Government category. Its broad maturity range (3–10 years) enhances diversification, while its substantial asset base ensures high liquidity. VGIT also demonstrates strong tracking efficiency, with year-to-date returns of 6.77% closely matching its benchmark's 6.84% as of October 31, 2025.

However, VGIT's shorter duration of 4.9 years may lead to lower yields compared to funds focusing on longer-maturity Treasuries, particularly in a normal yield curve environment. While the fund showed resilience during 2022's challenging conditions, it still experienced a double-digit decline, reflecting the interest rate risk inherent in intermediate-term bonds.

"Vanguard's bond ETFs are well diversified and low cost - and when it comes to fixed-income investing, low fees are a must."
– Morningstar Research Services

SCHR: Schwab Intermediate-Term U.S. Treasury ETF

The Schwab Intermediate-Term U.S. Treasury ETF (SCHR) is Charles Schwab's offering for investors seeking exposure to intermediate-term U.S. Treasuries. Designed with simplicity and cost-effectiveness in mind, SCHR provides an accessible way to invest in this segment of the bond market.

Fund Details

SCHR follows the Bloomberg U.S. Treasury 3–10 Year Index, which includes U.S. Treasury securities maturing between 3 and 10 years. This gives investors exposure to the intermediate portion of the Treasury yield curve, offering a balance between risk and return. While similar to VGIT in its strategy, SCHR operates with a smaller asset base.

As of November 2025, SCHR manages $11.91 billion in assets. Although smaller than VGIT's $42.86 billion, it still provides ample scale for most investors. The fund exclusively holds U.S. Treasury securities, ensuring zero credit risk while leaving its performance tied to interest rate fluctuations. Its focus on maturities within the 3–10 year range strikes a middle ground - avoiding the volatility of long-term bonds but offering higher yields than short-term options. Let’s take a closer look at how SCHR has performed in the market.

Performance Metrics

SCHR stands out with its ultra-low expense ratio of 0.03% and a 30-day SEC yield of 3.82%. Its average duration of 4.9 years complements its balanced strategy, contributing to a solid one-year return of 7%. These metrics align closely with VGIT and outperform IEF, showcasing SCHR’s competitive edge.

Advantages and Drawbacks

SCHR’s low costs and the strong reputation of Charles Schwab work in its favor, helping investors retain more of their returns. For those already using Schwab's platform, SCHR integrates seamlessly into their broader investment ecosystem.

"SCHR offers efficient, low-cost exposure to the intermediate portion of the U.S. Treasury yield curve." - Financial Analyst, ETF Trends

However, SCHR’s smaller asset base compared to VGIT may lead to slightly lower trading volumes. This could widen bid-ask spreads during periods of market turbulence, which might concern investors who frequently trade. Additionally, as a newer fund, SCHR has a shorter track record, offering less historical data for long-term analysis. Unlike some funds that employ yield-enhancing strategies, SCHR adopts a straightforward approach, leaving the decision between SCHR and VGIT largely dependent on individual investor preferences. For those already aligned with Schwab’s services, SCHR is a convenient and efficient choice.

Direct Comparison of IEF, VGIT, and SCHR

Comparison Table

Though IEF, VGIT, and SCHR share similar investment goals, they differ in fees, duration profiles, and performance metrics. Here's a breakdown of key data for bond investors:

ETF Expense Ratio Assets Under Management Average Duration 30-Day SEC Yield 1-Year Return 10-Year Annualized Return
IEF 0.15% $40.87 billion 5.7 years 3.88% 7.68% 1.24%
VGIT 0.04% $42.86 billion 4.9 years 3.76% 6.79% 1.52%
SCHR 0.03% $11.91 billion 4.9 years 3.77% N/A N/A

Key differences stand out: VGIT and SCHR charge significantly lower fees - roughly 75–80% less than IEF. For a $100,000 investment, IEF costs $150 annually in fees, compared to just $30–40 for VGIT and SCHR.

Duration also plays a critical role in interest rate sensitivity. IEF's longer duration of 5.7 years means it is about 16% more sensitive to rate changes than VGIT and SCHR, both with durations of 4.9 years. This heightened sensitivity is evident in past performance, with IEF experiencing a maximum drawdown of –23.93% during tough periods, compared to VGIT's more moderate –16.64%. These distinctions highlight how each ETF aligns with different bond allocation strategies.

Analysis Results

The analysis reveals three distinct profiles for these ETFs:

  • IEF: Offers the highest current yield at 3.88% and strong one-year performance. However, its higher fees and longer duration increase exposure to interest rate risk. Its substantial asset base of $40.87 billion ensures excellent liquidity.
  • VGIT: Shines with its ultra-low 0.04% expense ratio, 4.9-year duration, and a solid 10-year annualized return of 1.52%. It’s a strong choice for cost-sensitive investors looking for balanced yield and reduced interest rate risk.

"Investors are increasingly gravitating towards low-cost options like VGIT and SCHR, which provide similar exposure to IEF but at a fraction of the cost." - Financial Analyst, ETF Trends

  • SCHR: With the lowest expense ratio at 0.03%, SCHR is the most cost-efficient option. However, its smaller asset base of $11.91 billion could lead to slightly wider bid-ask spreads during volatile markets.

For investors focused on minimizing costs and accepting slightly shorter durations, VGIT and SCHR are attractive options. Those prioritizing current income might lean toward IEF. These factors set the stage for deeper discussions on risk, tax efficiency, and diversification in a bond portfolio.

How Each ETF Fits in Core Bond Allocation

Risk and Interest Rate Impact

Understanding the rate sensitivity of each ETF is crucial for building a resilient bond portfolio. IEF, with its 5.7-year duration, is approximately 16% more sensitive to interest rate changes compared to VGIT and SCHR, both of which have a duration of about 4.9 years. To put it simply, a 1% rise in interest rates would likely cause IEF to drop around 5.7%, while VGIT and SCHR would decline by about 4.9%.

"Higher duration leads to greater inverse price movement with rate shifts."

For investors who are more conservative or nearing retirement, VGIT and SCHR provide better downside protection in a rising rate environment. On the other hand, investors willing to accept more volatility in exchange for a higher yield might find IEF appealing, as it offers a 3.88% yield - the highest among the three ETFs. This balance between rate sensitivity and yield shapes the role each ETF plays in a portfolio.

Tax Efficiency

All three ETFs come with notable tax advantages, especially for taxable accounts. VGIT and SCHR stand out with their ultra-low expense ratio of 0.03%, which, combined with state tax exemptions, helps retain more of your returns. In contrast, IEF's expense ratio is higher at 0.15%. For a $100,000 investment, this difference equates to about $120 in annual savings with VGIT or SCHR.

Additionally, leveraging Mezzi's tax optimization tools can further enhance these benefits. Features like avoiding wash sales and employing tax-loss harvesting strategies add value, especially when rebalancing between these ETFs or adjusting duration exposure based on interest rate projections.

Portfolio Rebalancing and Diversification

Each ETF plays a unique role in a well-rounded fixed-income strategy, offering options tailored to different investment objectives. IEF serves as a strong core holding for those comfortable with moderate interest rate risk and who prioritize current income. Its $40.87 billion in assets also ensures excellent liquidity, making it suitable for frequent rebalancing.

VGIT strikes a balance between cost efficiency and moderate duration exposure. With $42.86 billion in assets and a 4.9-year duration, it’s a great choice for investors planning for significant expenses within a 3- to 10-year horizon.

SCHR, holding around $11.91 billion in assets and sharing the same 0.03% expense ratio as VGIT, is a solid alternative for retail investors. Its government backing eliminates credit risk, allowing investors to take calculated risks in other areas of their portfolio.

These ETFs, with their intermediate durations, hit a sweet spot between short-term bills and long-term bonds. This balance helps reduce overall portfolio volatility while maintaining a reasonable yield. As of November 2025, with the 10-year Treasury yielding 4.14%, intermediate-term Treasuries offer attractive risk-adjusted returns. These ETFs shine as stabilizers in uncertain economic times, providing both security and potential for steady returns.

Final Verdict: Best Intermediate Treasury ETF

ETF Summary

Each ETF offers unique benefits, making the best choice depend on your investment goals. VGIT shines as the most affordable option with its ultra-low 0.04% expense ratio and a solid 6.79% year-to-date return as of November 14, 2025. Its 4.9-year duration strikes a balance between interest rate sensitivity and yield potential. Paired with $42.86 billion in assets under management, VGIT provides excellent liquidity for frequent trading or rebalancing.

SCHR matches VGIT’s low 0.03% expense ratio while delivering a slightly higher 7% year-to-date return. It also shares the same 4.9-year duration but stands out with a 3.77% 30-day SEC yield, making it an attractive choice for income-focused investors. However, its smaller asset base of $11.91 billion may be a consideration.

IEF, on the other hand, boasts the strongest year-to-date performance at 7.68%. However, this comes with a higher expense ratio of 0.15% - five times that of VGIT and SCHR. Its 5.7-year duration increases sensitivity to interest rate changes, offering greater potential gains when rates drop but also exposing investors to more risk when rates rise.

"Vanguard's VGIT is among the cheapest options available, making it a strong contender for tax-efficient bond allocation." - Vanguard

These differences highlight how each ETF caters to specific investment priorities, allowing investors to align their choice with their financial goals.

Investment Recommendations

This analysis underscores earlier comparisons, offering actionable insights for various investor profiles. By focusing on cost, risk, and yield, the following recommendations can help guide your ETF selection:

  • Cost-conscious investors: VGIT is the ideal choice, combining the lowest fees with strong liquidity, making it a dependable option for frequent trading or rebalancing.
  • Income-focused investors: SCHR stands out with its appealing yield and minimal costs, particularly for those prioritizing income generation.
  • Investors seeking higher returns with more risk: IEF’s longer duration offers the potential for greater gains during falling interest rates, though it comes with higher fees and increased volatility.

For any of these ETFs, leveraging tools like Mezzi’s tax optimization features can help maximize after-tax returns. With capabilities like wash sale avoidance and tax-loss harvesting, Mezzi can be especially useful during portfolio rebalancing.

ETF Best For Key Advantage Main Drawback
VGIT Cost-conscious investors Lowest fees and strong liquidity Moderate yield
SCHR Income seekers Higher yield with low costs Smaller asset base
IEF Aggressive bond investors Highest return potential Higher fees and increased volatility

This breakdown highlights the strengths and weaknesses of each ETF, helping investors make informed decisions. While all three options can enhance a diversified fixed-income portfolio, VGIT’s combination of low costs, stable performance, and moderate risk makes it the most versatile choice for those seeking intermediate Treasury exposure in their core bond allocation.

FAQs

How do I decide between VGIT, SCHR, and IEF for my bond portfolio?

When comparing VGIT, SCHR, and IEF, it's important to weigh two main factors: 30-day SEC yield and duration. The 30-day SEC yield provides a quick look at the ETF’s annualized income potential, while duration measures how much the ETF’s price might shift in response to interest rate changes.

For instance, if you're looking for higher income, a higher yield could be attractive. However, keep in mind that a longer duration often comes with greater price volatility, especially if interest rates climb. Align your decision with your investment goals, risk tolerance, and how these ETFs fit within your broader portfolio strategy.

How does the duration of an ETF affect its performance when interest rates change?

Duration measures how an ETF's price reacts to shifts in interest rates. Simply put, the higher the duration, the more the ETF's price tends to drop when rates climb and rise when rates fall.

For intermediate Treasury ETFs like IEF, VGIT, and SCHR, grasping duration is key. If interest rates are on the way up, opting for shorter durations can help limit price swings. On the flip side, when rates are dropping, longer durations can amplify returns by taking greater advantage of the decline.

What are the risks and advantages of investing in an ETF with a smaller asset base like SCHR?

Investing in an ETF with a smaller asset base, like SCHR, has its ups and downs. On the risk side, these smaller ETFs often experience lower trading volumes. This can result in wider bid-ask spreads, meaning you might face higher transaction costs. There's also the possibility of the fund closing if it doesn't attract enough investor interest. While closures typically allow investors to redeem their holdings at net asset value (NAV), it’s still something to keep in mind.

That said, smaller ETFs can bring unique advantages. They often provide more targeted exposure to specific market segments or strategies. Take SCHR, for instance - it focuses on intermediate-term U.S. Treasury bonds. This makes it a useful tool for diversifying a core bond portfolio. Ultimately, it’s important to balance these considerations with your personal investment goals and risk tolerance.

Related Blog Posts

Table of Contents

Text Link

Book Free Consultation

Walk through Mezzi with our team, review your current situation, and ask any questions you may have.

Book Free Consultation
Ask ChatGPT about Mezzi