⚖️ LQD vs VCIT Comparison · Free & No Signup

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

Name: LQD vs VCIT: expense ratio, index, holdings and returns
Creator: ETF BFF
License: https://etfbff.com/about/

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.

Both funds trade commission-free at every major brokerage. Where to buy them →

✓ ETF BFF Editorial Team · Data as of Oct 14, 2026 · Educational only, not financial advice

LQD

iShares iBoxx $ Investment Grade Corporate Bond ETF

Expense Ratio

0.14%

1-Year Return

-8.5%

AUM

$28.3B

Holdings

2,800

VCIT

Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares

Expense Ratio

0.04% ✓

1-Year Return

-6.9%

AUM

$68.6B

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	$28.3B	$68.6B
Holdings	2,800	2,300
Inception	2002	2009
1-Year Return	-8.49%	-6.91%
3-Year Return	+5.20%	+6.15%
5-Year Return	-1.05%	+0.56%
Dividend Yield	4.91%	5.08%
Holdings Overlap	See holdings overlap →
Avg Bid-Ask Spread	0.01%	0.01%

AUM and returns updated Oct 14, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.

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📊 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.

Investment amount$ Years held Expected annual return%

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.

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❓ LQD vs VCIT: Frequently Asked Questions

What is the difference between LQD and VCIT?

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.

Are investment-grade corporate bonds safe?

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.

What yield do LQD and VCIT pay?

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.

How does duration affect LQD and VCIT in different rate environments?

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.

Is VCIT better than BND for corporate bond exposure?

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 →

📄 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.