VMBS vs. IEF
VMBS (Vanguard Mortgage-Backed Securities ETF) and IEF (iShares 7-10 Year Treasury Bond ETF) are both exchange-traded funds - VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS 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, VMBS returned 1.39%/yr vs 0.64%/yr for IEF. A 0.77 correlation means they provide meaningful diversification when combined. VMBS charges 0.04%/yr vs 0.15%/yr for IEF.
Performance
VMBS vs. IEF - Performance Comparison
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Returns By Period
In the year-to-date period, VMBS achieves a 1.00% return, which is significantly higher than IEF's -0.28% return. Over the past 10 years, VMBS has outperformed IEF with an annualized return of 1.39%, while IEF has yielded a comparatively lower 0.64% annualized return.
VMBS
- 1D
- 0.28%
- 1M
- 0.93%
- YTD
- 1.00%
- 6M
- 1.13%
- 1Y
- 6.39%
- 3Y*
- 4.57%
- 5Y*
- 0.60%
- 10Y*
- 1.39%
IEF
- 1D
- 0.36%
- 1M
- 1.00%
- YTD
- -0.28%
- 6M
- -0.36%
- 1Y
- 3.70%
- 3Y*
- 2.76%
- 5Y*
- -1.19%
- 10Y*
- 0.64%
VMBS vs. IEF - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 1.00% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
IEF iShares 7-10 Year Treasury Bond ETF | -0.28% | 8.03% | -0.63% | 3.64% | -15.15% | -3.33% | 10.01% | 8.03% | 0.99% | 2.55% |
Correlation
The correlation between VMBS and IEF 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 VMBS and IEF 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
VMBS vs. IEF — Risk / Return Rank
VMBS
IEF
VMBS vs. IEF - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) 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.
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.
| VMBS | IEF | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | +0.70 | ||
| Sortino ratioReturn per unit of downside risk | +1.02 | ||
| Omega ratioGain probability vs. loss probability | 1.27 | 1.13 | +0.14 |
| Calmar ratioReturn relative to maximum drawdown | 2.39 | 0.91 | +1.48 |
| Martin ratioReturn relative to average drawdown | 7.63 | 2.50 | +5.14 |
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Drawdowns
VMBS vs. IEF - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, smaller than the maximum IEF drawdown of -23.93%. Use the drawdown chart below to compare losses from any high point for VMBS and IEF.
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Drawdown Indicators
| VMBS | IEF | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -23.93% | +6.46% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -4.07% | +1.39% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | -7.74% | +0.09% |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | -21.40% | +4.28% |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | -23.93% | +6.46% |
Current DrawdownCurrent decline from peak | -0.99% | -11.01% | +10.02% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -5.35% | +2.86% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.84% | 1.48% | -0.64% |
Volatility
VMBS vs. IEF - Volatility Comparison
The current volatility for Vanguard Mortgage-Backed Securities ETF (VMBS) is 1.39%, while iShares 7-10 Year Treasury Bond ETF (IEF) has a volatility of 1.48%. This indicates that VMBS experiences smaller price fluctuations and is considered to be less risky than IEF based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VMBS | IEF | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.39% | 1.48% | -0.09% |
Volatility (6M)Calculated over the trailing 6-month period | 3.27% | 3.47% | -0.20% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.30% | 4.70% | -0.40% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.78% | 7.71% | -0.93% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.41% | 6.63% | -1.22% |
VMBS vs. IEF - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is lower than IEF's 0.15% expense ratio. Despite the difference, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
VMBS vs. IEF - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.17%, 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% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.17% | 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, VMBS and IEF 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 (1.48%) compared to VMBS (1.39%). In terms of maximum drawdown, VMBS dropped -17.47% vs IEF's -23.93%.
On 10-year performance, VMBS leads with 1.39% vs 0.64% 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 1.39% return vs 0.64%. 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 4.17%, compared with 3.89% for IEF.
VMBS is categorized as Mortgage Backed Securities, while IEF is Government Bonds. VMBS tracks Barclays Capital U.S. MBS Index, while IEF tracks ICE U.S. Treasury 7-10 Year Bond Index. They also come from different issuers: Vanguard and iShares. Their fees differ too: 0.04% for VMBS and 0.15% for IEF.
VMBS currently has the higher Sharpe Ratio (1.49 vs 0.79), 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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