Fidelity FIGB vs Vanguard VGIT: Bond ETF Analysis for June 2026
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
bond-etftreasury-bonds
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The allocation debate between the Fidelity Intermediate Treasury Bond ETF (FIGB) and the Vanguard Intermediate-Term Treasury ETF (VGIT) is intensifying as of June 2026. Both ETFs track intermediate-term US government debt, providing core fixed-income exposure for institutional portfolios. This comparison arrives with the 10-year Treasury yield at 4.31%, a critical level for duration-sensitive assets.
Intermediate-duration Treasury ETFs are a focal point for investors repositioning portfolios ahead of anticipated Federal Reserve policy shifts. The asset class offers a balance between the interest rate sensitivity of long-term bonds and the minimal yield of short-term instruments. Current macroeconomic uncertainty makes precise duration targeting essential for managing portfolio volatility.
The last significant shift in this segment occurred in late 2025 when Vanguard lowered VGIT's expense ratio to 0.04%, intensifying price competition among ultra-low-cost ETF providers. Fidelity launched FIGB in 2021 with a zero-fee structure as a direct challenge to Vanguard's dominance in the passive fixed-income space. This fee war has fundamentally altered the economics of core bond fund ownership.
The catalyst for the current scrutiny is the upcoming FOMC meeting on July 26, 2026. Markets are pricing in a 65% probability of a rate cut, which would directly impact the performance of intermediate-term bonds. Portfolio managers are comparing vehicles like FIGB and VGIT to optimize entry points for duration extension strategies.
Concrete metrics reveal the operational differences between the two ETFs. VGIT holds a significant scale advantage with $42.5 billion in assets under management, compared to FIGB's $2.1 billion. This translates into superior liquidity; VGIT's average daily trading volume exceeds $180 million, while FIGB's is approximately $15 million. The bid-ask spread for VGIT is typically 0.01%, versus 0.03% for FIGB.
| Metric | Vanguard VGIT | Fidelity FIGB |
|---|---|---|
| Expense Ratio | 0.04% | 0.00% |
| AUM | $42.5B | $2.1B |
| Avg. Daily Volume | $180M | $15M |
| 30-Day SEC Yield | 4.28% | 4.25% |
Both ETFs maintain nearly identical effective durations, around 5.2 years, ensuring similar interest rate risk profiles. VGIT's portfolio consists of 118 holdings, while FIGB holds 82 securities. The yield differential of 3 basis points reflects FIGB's slight tracking error and smaller scale, partially offsetting its zero expense ratio. Over the past year, VGIT has returned 3.8%, slightly outperforming FIGB's 3.6% return.
The competition between FIGB and VGIT signals a broader trend of fee compression across the entire fixed-income ETF universe. Rival issuers like iShares (IGIB) and SPDR (SPTI) face pressure to justify their higher expense ratios, which range from 0.06% to 0.10%. This benefits allocators by reducing costs, but also consolidates market share among the largest providers, potentially reducing innovation.
A key risk for FIGB adopters is liquidity provision during periods of market stress. While authorized participants can create and redeem shares to manage flows, smaller AUM can lead to wider deviations from net asset value under volatile conditions. VGIT's massive scale provides a structural advantage for large-block trades, a critical consideration for pension funds and endowments.
Institutional flow data indicates net inflows of $850 million into VGIT over the past month, compared to $120 million for FIGB. This suggests that despite FIGB's cost advantage, the market currently prioritizes liquidity and track record. The flows into these ETFs have contributed to tightening yield spreads between 3-year and 10-year Treasury notes by 5 basis points this quarter.
The July 26 FOMC decision is the primary catalyst for near-term performance. A rate cut would likely boost both ETFs, but the magnitude of the move will depend on the accompanying dot plot and Jerome Powell's press conference commentary. A dovish pivot could trigger a steepening of the yield curve, benefiting intermediate durations.
The 4.25% yield level on the 10-year Treasury note represents a key technical support. A sustained break below this threshold could signal a broader rally in government bonds, pushing FIGB and VGIT prices higher. Conversely, a breakout above 4.50% would test the durability of current allocations and potentially trigger outflows.
The June CPI report, scheduled for release on July 11, will provide critical data on inflation trends. A print significantly below the 2.7% consensus forecast would reinforce the case for aggressive Fed easing, further supporting intermediate-term bonds. Investors should monitor trading volumes in both ETFs following the release for signs of institutional repositioning. Explore our analysis on Treasury yield forecasts for deeper context.
Intermediate Treasury ETFs like FIGB and VGIT invest exclusively in U.S. government debt with maturities typically between 3 and 10 years. They carry no credit risk but are sensitive to interest rate changes. Total bond market ETFs, such as BND or AGG, include a mix of government, corporate, and mortgage-backed securities across all maturities, introducing credit risk but offering greater diversification. The choice depends on an investor's specific risk tolerance and desire for pure interest rate exposure.
Fidelity waives the fund's entire management fee, meaning investors pay no ongoing costs to hold FIGB. This is subsidized by Fidelity's broader business model. The waiver is contractual and can be revoked, but has been in place since the ETF's inception. The primary benefit is that 100% of the fund's yield, minus minimal operational costs, is passed to shareholders, providing a slight yield advantage over competitors before factoring in tracking error.
During the Fed's hiking cycle from 2022 to 2023, both ETFs exhibited nearly identical performance trends due to their similar durations. VGIT declined 12.5% in 2022, while FIGB fell 12.7%. The minor difference is attributed to VGIT's longer operational history and more strong liquidity mechanisms, which allowed it to track its index more precisely during volatile periods. In rising rate environments, the expense ratio becomes less impactful than liquidity and tracking efficiency.
VGIT's superior liquidity and scale outweigh FIGB's zero fee for most institutional-sized allocations.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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