⚖️ LQD vs VCIT Comparison · Free & No Signup

LQD vs VCIT: Investment-Grade Corporate Bonds — VCIT Is 3.5x Cheaper

LQD and VCIT both hold investment-grade corporate bonds from US companies. VCIT costs 0.04%; LQD costs 0.14%. Over time on a bond portfolio, that fee gap compounds significantly.

💰 VCIT is cheaper 🔬 Compare top 10 holdings → 💡 Plain-English verdict
🤝 BFF Take
VCIT Wins on Cost — LQD Is the Liquidity Choice for Bond Traders

LQD (iShares iBoxx $ Investment Grade Corporate Bond ETF) and VCIT (Vanguard Intermediate-Term Corporate Bond ETF) both provide exposure to USD-denominated investment-grade corporate bonds from US issuers. LQD is the older, larger fund with $28B+ in AUM and a highly liquid options market — the go-to vehicle for institutional bond traders. VCIT charges 0.04% vs LQD's 0.14% — a 10 basis point annual fee advantage that is significant in a low-yield fixed income environment where every basis point of yield matters. Both focus on intermediate duration (5-10 years). The index construction differs slightly — LQD tracks the iBoxx IG index while VCIT tracks Bloomberg US 5-10 Year Corporate Bond — but the practical exposure is very similar. For buy-and-hold investors, VCIT is the clear cost winner.

📋 Quick Takeaways
🏦Both hold investment-grade US corporate bonds — Apple, Microsoft, JPMorgan, Verizon bonds are typical holdings
💰VCIT costs 0.04% vs LQD's 0.14% — 3.5x cheaper; on a $100K bond allocation saves $100/yr
📊LQD has $28B+ AUM vs VCIT's $45B — both highly liquid; LQD has deeper options market for institutions
📊 Data-Based Take: VCIT has the lower fee

Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.

✓ Reviewed by a CFA® Charterholder · Data as of Jul 14, 2026 · Educational only, not financial advice
LQD
iShares iBoxx $ Investment Grade Corporate Bond ETF
Expense Ratio
0.14%
1-Year Return
-0.5%
AUM
$33.1B
Holdings
2,800
VCIT
Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares
Expense Ratio
0.04% ✓
1-Year Return
-0.2%
AUM
$69.4B
Holdings
2,300

📋 LQD vs VCIT — Key Facts Side by Side

Metric LQD VCIT
Fund Name iShares iBoxx $ Investment Grade Corporate Bond ETF Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares
Issuer iShares Vanguard
Tracks Index iBoxx $ Liquid Investment Grade Bloomberg US 5-10 Year Corporate Bond
Expense Ratio 0.14% 0.04% ✓
Cost per $10K/yr $14.00 $4.00
AUM $33.1B $69.4B
Holdings 2,800 2,300
Inception 2002 2009
1-Year Return -0.55% -0.23%
3-Year Return +5.25% +6.31%
5-Year Return -0.59% +0.93%
Dividend Yield 4.55% 4.78%
Holdings Overlap See holdings overlap →
Avg Bid-Ask Spread 0.01% 0.01%

Expense ratio, AUM, and returns updated Jul 14, 2026 from ETF BFF database. Returns are annualised. Not investment advice.

📊 LQD vs VCIT — Annualised Returns

Annualised returns (trailing, price-based). Past performance does not guarantee future results.

🎯 Which Fund Fits Which Investor?

Often fits investors who...
LQD
  • want income and stability with lower portfolio volatility
  • already use iShares and prefer staying within one fund family
Often fits investors who...
VCIT
  • want the lowest fees: saves ~$10/yr per $10K vs LQD
  • want income and stability with lower portfolio volatility

💰 What the Fee Difference Actually Costs

Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.

Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.

⚙️ Want the Full Interactive Comparison?

Side-by-side holdings overlap, sector breakdown, and live performance tabs, all in one place.

Run Full LQD vs VCIT Comparison → Free · No signup · Instant results
📧 Free Weekly Newsletter

Bond ETFs without the fixed-income jargon

Duration, yield curves, credit risk — one clear concept per week, free forever.

Free to learn forever · No spam · Unsubscribe anytime

✅ You're in! Check your inbox for your first issue.

❓ LQD vs VCIT — Frequently Asked Questions

LQD and VCIT both hold investment-grade US corporate bonds at intermediate duration, but with key differences: LQD tracks the iBoxx index (wider spread, some bonds under 5 years); VCIT specifically targets bonds with 5-10 year maturities. VCIT's tighter maturity range makes its duration profile more predictable. The biggest practical difference is cost — VCIT at 0.04% vs LQD at 0.14%. LQD has more trading volume and options market depth.
Investment-grade corporate bonds (BBB- or higher by S&P) have low historical default rates — typically 0.1-0.3% annually. The primary risk is interest rate risk (duration), not credit risk. In 2022, LQD and VCIT fell 15-20% due to rising rates despite no increase in defaults. Corporate bonds also carry credit spread risk — in recessions, spreads widen and prices fall even if rates stay stable. They are safer than high-yield bonds (HYG/JNK) but more volatile than Treasuries.
Both typically yield 4.5-5.5% depending on the rate environment. VCIT's lower expense ratio means investors keep more of the gross yield. In a 5% yield environment, VCIT's 0.04% fee means 4.96% net vs LQD's 4.86% — a 10bp annual advantage that matters when fixed income returns are modest in absolute terms.
Both LQD and VCIT have intermediate duration of roughly 8-9 years. This means each 1% rise in rates causes approximately 8-9% decline in NAV. In a falling rate environment, both benefit similarly. Investors who want less rate sensitivity should look at short-duration alternatives (VCSH for corporate bonds, JPST or SHY for shorter duration). Investors who want more rate exposure can look at VCLT or LQD's longer-duration alternatives.
BND (Vanguard Total Bond Market ETF, 0.03%) is a broader fund that includes Treasuries, agency bonds, and corporate bonds — roughly 30% of BND is corporate bonds. VCIT is purely corporate bonds. For investors specifically wanting corporate bond exposure (to tilt away from Treasuries and capture credit spread), VCIT gives a purer corporate bond allocation. For broad bond market exposure, BND is the cheaper, more diversified option.

New to ETF investing? See answers to the most common ETF questions →

🔍 Related ETF Comparisons

HYG vs JNK MUB vs VTEB EMB vs VWOB SGOV vs BIL See all comparisons →

📚 Deep Dive Guide

Bond ETFs for Beginners: What They Are, How They Work →

📄 LQD & VCIT Fact Sheets

LQD Fact Sheet→ VCIT Fact Sheet→
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.