IEF vs. VMBS
IEF (iShares 7-10 Year Treasury Bond ETF) and VMBS (Vanguard Mortgage-Backed Securities ETF) are both exchange-traded funds - IEF is a Government Bonds fund tracking the ICE U.S. Treasury 7-10 Year Bond Index, while VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS Index. Both are passively managed. Over the past 10 years, IEF returned 0.56%/yr vs 1.36%/yr for VMBS. A 0.77 correlation means they provide meaningful diversification when combined. IEF charges 0.15%/yr vs 0.04%/yr for VMBS.
Performance
IEF vs. VMBS - Performance Comparison
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Returns By Period
In the year-to-date period, IEF achieves a -0.64% return, which is significantly lower than VMBS's 0.72% return. Over the past 10 years, IEF has underperformed VMBS with an annualized return of 0.56%, while VMBS has yielded a comparatively higher 1.36% annualized return.
IEF
- 1D
- -0.53%
- 1M
- 0.93%
- YTD
- -0.64%
- 6M
- -0.69%
- 1Y
- 3.39%
- 3Y*
- 2.64%
- 5Y*
- -1.26%
- 10Y*
- 0.56%
VMBS
- 1D
- -0.51%
- 1M
- 0.98%
- YTD
- 0.72%
- 6M
- 0.96%
- 1Y
- 6.16%
- 3Y*
- 4.48%
- 5Y*
- 0.55%
- 10Y*
- 1.36%
IEF vs. VMBS - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
IEF iShares 7-10 Year Treasury Bond ETF | -0.64% | 8.03% | -0.63% | 3.64% | -15.15% | -3.33% | 10.01% | 8.03% | 0.99% | 2.55% |
VMBS Vanguard Mortgage-Backed Securities ETF | 0.72% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
Correlation
The correlation between IEF and VMBS is 0.94, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.94 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.95 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.93 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.85 |
Correlation (All Time) Calculated using the full available price history since Nov 23, 2009 | 0.77 |
The correlation between IEF and VMBS shifts across timeframes, from 0.77 (all time) to 0.95 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
IEF vs. VMBS — Risk / Return Rank
IEF
VMBS
IEF vs. VMBS - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for iShares 7-10 Year Treasury Bond ETF (IEF) and Vanguard Mortgage-Backed Securities ETF (VMBS). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.
| IEF | VMBS | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -0.72 | ||
| Sortino ratioReturn per unit of downside risk | -1.04 | ||
| Omega ratioGain probability vs. loss probability | 1.12 | 1.26 | -0.14 |
| Calmar ratioReturn relative to maximum drawdown | 0.84 | 2.30 | -1.47 |
| Martin ratioReturn relative to average drawdown | 2.30 | 7.38 | -5.08 |
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Drawdowns
IEF vs. VMBS - Drawdown Comparison
The maximum IEF drawdown since its inception was -23.93%, which is greater than VMBS's maximum drawdown of -17.47%. Use the drawdown chart below to compare losses from any high point for IEF and VMBS.
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Drawdown Indicators
| IEF | VMBS | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -23.93% | -17.47% | -6.46% |
Max Drawdown (1Y)Largest decline over 1 year | -4.07% | -2.68% | -1.39% |
Max Drawdown (3Y)Largest decline over 3 years | -7.74% | -7.65% | -0.09% |
Max Drawdown (5Y)Largest decline over 5 years | -21.40% | -17.12% | -4.28% |
Max Drawdown (10Y)Largest decline over 10 years | -23.93% | -17.47% | -6.46% |
Current DrawdownCurrent decline from peak | -11.33% | -1.26% | -10.07% |
Average DrawdownAverage peak-to-trough decline | -5.35% | -2.49% | -2.86% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 1.48% | 0.84% | +0.64% |
Volatility
IEF vs. VMBS - Volatility Comparison
iShares 7-10 Year Treasury Bond ETF (IEF) and Vanguard Mortgage-Backed Securities ETF (VMBS) have volatilities of 1.52% and 1.48%, respectively, indicating that both stocks experience similar levels of price fluctuations. This suggests that the risk associated with both stocks, as measured by volatility, is nearly the same. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| IEF | VMBS | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.52% | 1.48% | +0.04% |
Volatility (6M)Calculated over the trailing 6-month period | 3.46% | 3.27% | +0.19% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.71% | 4.30% | +0.41% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 7.71% | 6.78% | +0.93% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 6.63% | 5.41% | +1.22% |
IEF vs. VMBS - Expense Ratio Comparison
IEF has a 0.15% expense ratio, which is higher than VMBS's 0.04% expense ratio. However, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
IEF vs. VMBS - Dividend Comparison
IEF's dividend yield for the trailing twelve months is around 3.90%, less than VMBS's 4.18% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
IEF iShares 7-10 Year Treasury Bond ETF | 3.90% | 3.77% | 3.62% | 2.91% | 1.96% | 0.83% | 1.08% | 2.08% | 2.24% | 1.82% | 1.81% | 1.90% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.18% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
Frequently Asked Questions
With a correlation of 0.94, IEF and VMBS move almost identically. Holding both adds very little diversification - you're essentially doubling your position in the same market segment. Choosing one is usually more capital-efficient.
IEF has higher volatility (1.52%) compared to VMBS (1.48%). In terms of maximum drawdown, IEF dropped -23.93% vs VMBS's -17.47%.
On 10-year performance, VMBS leads with 1.36% vs 0.56% for IEF. On fees, VMBS is cheaper at 0.04% per year. Their volatility is very similar. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, VMBS has performed better with a 1.36% return vs 0.56%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
VMBS is cheaper with a 0.04% expense ratio, compared with 0.15% for IEF.
VMBS has the higher dividend yield at 4.18%, compared with 3.90% for IEF.
IEF is categorized as Government Bonds, while VMBS is Mortgage Backed Securities. IEF tracks ICE U.S. Treasury 7-10 Year Bond Index, while VMBS tracks Barclays Capital U.S. MBS Index. They also come from different issuers: iShares and Vanguard. Their fees differ too: 0.15% for IEF and 0.04% for VMBS.
VMBS currently has the higher Sharpe Ratio (1.44 vs 0.73), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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