Which Is the Better Government Bond ETF, iShares' MUB or Fidelity's FIGB?
Quick Take
The article compares iShares' MUB and Fidelity's FIGB government bond ETFs for performance and features.
Key Points
- MUB focuses on municipal bonds, offering tax advantages.
- FIGB invests in U.S. government bonds with lower expense ratios.
- Consider investment goals when choosing between the two.
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~3 min readRobert Izquierdo, The Motley Fool
4 min read
The iShares National Muni Bond ETF (NYSEMKT:MUB) and Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) both provide exposure to high-quality debt, but they serve different roles based on an investor's tax situation and credit preference.
Investors looking for stability often turn to investment-grade debt, but the choice between the iShares fund and the Fidelity fund involves more than just picking a bond ETF. These two funds differ in their tax treatment, credit exposure, and cost structures, making each suitable for distinct portfolio goals within a fixed-income allocation.
Snapshot (cost & size)
| Metric | MUB | FIGB |
|---|---|---|
| Issuer | iShares | Fidelity |
| Expense ratio | 0.05% | 0.36% |
| 1-yr return (as of May 11, 2026) | 4.94% | 4.57% |
| Dividend yield | 3.20% | 4.10% |
| Beta | 0.24 | 0.25 |
| AUM | $44.0 billion | $464.9 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is the more affordable option with a 0.05% expense ratio, compared to 0.36% for the Fidelity fund. However, FIGB offers a higher payout, with a trailing yield approximately 0.9 percentage points above its peer.
Performance & risk comparison
| Metric | MUB | FIGB |
|---|---|---|
| Max drawdown (5 yr) | (11.90%) | (18.10%) |
| Growth of $1,000 over 5 years (total return) | $1,048 | $1,023 |
What's inside
The Fidelity Investment Grade Bond ETF is a core fixed-income fund that holds over 800 positions across various high-grade sectors. Its sector exposure is primarily in government bonds, which comprises 45.17% of its holdings. Its largest positions are in various U.S. Treasury bonds and notes. Launched in 2021, the fund has paid $1.77 per share over the trailing 12 months. This fund may appeal to those seeking broader market exposure across various investment-grade sectors, such as U.S. Treasuries and corporate credit.
In contrast, the iShares National Muni Bond ETF focuses exclusively on investment-grade U.S. municipal bonds, which are often exempt from federal income taxes. Its portfolio is strictly concentrated in fixed-income securities without an equity sector breakdown. The fund lists 6,538 holdings, making it highly diversified. Launched in 2007, the iShares fund has a trailing-12-month dividend of $3.39 per share. For investors in high tax brackets, the lower yields of the iShares fund may be more attractive on a tax-equivalent basis.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in government bonds delivers stable, low-risk income. Two funds offering exposure in this area are the Fidelity Investment Grade Bond ETF (FIGB) and iShares National Muni Bond ETF (MUB). Choosing between them comes down to a few key considerations.
— Originally published at finance.yahoo.com
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