LQD vs. IEF

Last updated Jun 3, 2026

LQD (iShares iBoxx $ Investment Grade Corporate Bond ETF) and IEF (iShares 7-10 Year Treasury Bond ETF) are both exchange-traded funds - LQD is a Corporate Bonds fund tracking the iBoxx $ Liquid Investment Grade Index, while IEF is a Government Bonds fund tracking the ICE U.S. Treasury 7-10 Year Bond Index. Both are passively managed. Over the past 10 years, LQD returned 2.55%/yr vs 0.66%/yr for IEF. A 0.76 correlation means they provide meaningful diversification when combined. Both charge a 0.15% expense ratio.

Performance

LQD vs. IEF - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and iShares 7-10 Year Treasury Bond ETF (IEF). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, LQD achieves a 0.74% return, which is significantly higher than IEF's -0.40% return. Over the past 10 years, LQD has outperformed IEF with an annualized return of 2.55%, while IEF has yielded a comparatively lower 0.66% annualized return.

LQD

• 1D: -0.01%
• 1M: 0.67%
• YTD: 0.74%
• 6M: 0.47%
• 1Y: 6.42%
• 3Y*: 5.05%
• 5Y*: 0.15%
• 10Y*: 2.55%

IEF

• 1D: 0.07%
• 1M: -0.19%
• YTD: -0.40%
• 6M: -0.71%
• 1Y: 4.23%
• 3Y*: 2.56%
• 5Y*: -0.98%
• 10Y*: 0.66%

*Multi-year figures are annualized to reflect compound growth (CAGR)

LQD vs. IEF - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF	0.74%	7.90%	0.86%	9.40%	-17.92%	-1.84%	10.97%	17.37%	-3.79%	7.06%
IEF iShares 7-10 Year Treasury Bond ETF	-0.40%	8.03%	-0.63%	3.64%	-15.15%	-3.33%	10.01%	8.03%	0.99%	2.55%

Correlation

The correlation between LQD and IEF is 0.89, 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	0.89
Correlation (3Y) Calculated over the trailing 3-year period	0.92
Correlation (5Y) Calculated over the trailing 5-year period	0.89
Correlation (10Y) Calculated over the trailing 10-year period	0.82
Correlation (All Time) Calculated using the full available price history since Jul 29, 2002	0.76

The correlation between LQD and IEF shifts across timeframes, from 0.76 (all time) to 0.92 (3 years), reflecting how their relationship changes across market environments.

Return for Risk

LQD vs. IEF — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

LQD

LQD Risk / Return Rank: 33
LQD Sharpe Ratio Rank: 33
LQD Sortino Ratio Rank: 33
LQD Omega Ratio Rank: 31
LQD Calmar Ratio Rank: 37
LQD Martin Ratio Rank: 33

IEF

IEF Risk / Return Rank: 23
IEF Sharpe Ratio Rank: 25
IEF Sortino Ratio Rank: 25
IEF Omega Ratio Rank: 23
IEF Calmar Ratio Rank: 21
IEF Martin Ratio Rank: 22

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

LQD vs. IEF - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and iShares 7-10 Year Treasury Bond ETF (IEF). 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.

	LQD	IEF	Difference
Sharpe ratio Return per unit of total volatility	1.20	0.89	+0.31
Sortino ratio Return per unit of downside risk	1.77	1.34	+0.43
Omega ratio Gain probability vs. loss probability	1.21	1.15	+0.06
Calmar ratio Return relative to maximum drawdown	1.83	0.95	+0.88
Martin ratio Return relative to average drawdown	5.26	2.86	+2.41
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

LQD vs. IEF - Sharpe Ratio Comparison

The current LQD Sharpe Ratio is 1.20, which is higher than the IEF Sharpe Ratio of 0.89. The chart below compares the historical Sharpe Ratios of LQD and IEF, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	LQD	IEF	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.20	0.89	+0.31
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	0.02	-0.13	+0.15
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	0.29	0.10	+0.19
Sharpe Ratio (All Time) Calculated using the full available price history	0.54	0.50	+0.04

Drawdowns

LQD vs. IEF - Drawdown Comparison

The maximum LQD drawdown since its inception was -24.95%, roughly equal to the maximum IEF drawdown of -23.93%. Use the drawdown chart below to compare losses from any high point for LQD and IEF.

Drawdown Indicators

	LQD	IEF	Difference
Max Drawdown Largest peak-to-trough decline	-24.95%	-23.93%	-1.02%
Max Drawdown (1Y) Largest decline over 1 year	-3.34%	-4.07%	+0.73%
Max Drawdown (3Y) Largest decline over 3 years	-8.43%	-7.74%	-0.69%
Max Drawdown (5Y) Largest decline over 5 years	-24.95%	-21.40%	-3.55%
Max Drawdown (10Y) Largest decline over 10 years	-24.95%	-23.93%	-1.02%
Current Drawdown Current decline from peak	-3.45%	-11.12%	+7.67%
Average Drawdown Average peak-to-trough decline	-3.99%	-5.34%	+1.35%
Ulcer Index Depth and duration of drawdowns from previous peaks	1.16%	1.36%	-0.20%

Volatility

LQD vs. IEF - Volatility Comparison

iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has a higher volatility of 1.66% compared to iShares 7-10 Year Treasury Bond ETF (IEF) at 1.57%. This indicates that LQD's price experiences larger fluctuations and is considered to be riskier than IEF based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	LQD	IEF	Difference
Volatility (1M) Calculated over the trailing 1-month period	1.66%	1.57%	+0.09%
Volatility (6M) Calculated over the trailing 6-month period	3.92%	3.37%	+0.55%
Volatility (1Y) Calculated over the trailing 1-year period	5.36%	4.79%	+0.57%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	8.65%	7.71%	+0.94%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	8.68%	6.62%	+2.06%

LQD vs. IEF - Expense Ratio Comparison

Both LQD and IEF have an expense ratio of 0.15%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.

Dividends

LQD vs. IEF - Dividend Comparison

LQD's dividend yield for the trailing twelve months is around 4.56%, more than IEF's 3.89% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
IEF iShares 7-10 Year Treasury Bond ETF	3.89%	3.77%	3.62%	2.91%	1.96%	0.83%	1.08%	2.08%	2.24%	1.82%	1.81%	1.90%
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF	4.56%	4.48%	4.45%	3.99%	3.30%	2.30%	2.66%	3.29%	3.67%	3.10%	3.34%	3.47%

Frequently Asked Questions

Can I hold both LQD and IEF in my portfolio?

LQD and IEF have a correlation of 0.89, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, LQD or IEF?

LQD has higher volatility (1.66%) compared to IEF (1.57%). In terms of maximum drawdown, LQD dropped -24.95% vs IEF's -23.93%.

Which ETF is better, LQD or IEF?

On 10-year performance, LQD leads with 2.55% vs 0.66% for IEF. Both ETFs have the same 0.15% expense ratio. Their volatility is very similar. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, LQD or IEF?

Over the 10-year period, LQD has performed better with a 2.55% return vs 0.66%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, LQD or IEF?

LQD and IEF have the same expense ratio: 0.15% per year.

Which ETF pays a higher dividend yield, LQD or IEF?

LQD has the higher dividend yield at 4.56%, compared with 3.89% for IEF.

What is the main difference between LQD and IEF?

LQD is categorized as Corporate Bonds, while IEF is Government Bonds. LQD tracks iBoxx $ Liquid Investment Grade Index, while IEF tracks ICE U.S. Treasury 7-10 Year Bond Index.

Which has better risk-adjusted returns?

LQD currently has the higher Sharpe Ratio (1.20 vs 0.89), 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.