Comparing IGSB vs VTES: Corporate Bonds Beat Tax-Exempt Bonds on Returns
IGSB's 4.60% dividend yield and lower expense ratio appeal to income investors, while VTES offers tax-free income for high earners.
Overview
Comparing iShares 1-5 Year Investment Grade Corporate Bond ETF (NASDAQ:IGSB) and Vanguard Short-Term Tax-Exempt Bond ETF (NYSEMKT:VTES) reveals a choice between higher-yielding taxable corporate debt and lower-yielding tax-exempt municipal securities for short-duration fixed-income portfolios.
Both funds aim to provide income and stability by targeting investment-grade bonds with relatively short maturities. However, they serve distinct tax strategies. The iShares ETF focuses on corporate issuers with maturities between one and five years, while the Vanguard fund prioritizes municipal bonds that are typically exempt from federal income taxes.
Details
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Source
Originally published at www.fool.com.