From The Motley Fool · Dana George · · 1m
Vanguard Short-Term Treasury ETF vs Tax-Exempt Bond ETF
Which short-term bond ETF offers better tax efficiency and lower risk?
In brief
Which short-term bond ETF offers better tax efficiency and lower risk? Vanguard Short-Term Treasury ETF (VGSH) provides higher yield and lower risk for conservative investors seeking tax-free income. Originally reported by The Motley Fool.
Quick answers
- What are the ETFs?
- Vanguard Short-Term Treasury ETF (VGSH) offers a lower expense ratio and higher trailing yield than Vanguard Short-Term Tax-Exempt Bond ETF (VTES).
- What is the key takeaway from Vanguard Short-Term Treasury ETF vs Tax-Exempt Bond ETF?
- Vanguard Short-Term Treasury ETF (VGSH) provides higher yield and lower risk for conservative investors seeking tax-free income.
What are the ETFs?
Vanguard Short-Term Treasury ETF (VGSH) offers a lower expense ratio and higher trailing yield than Vanguard Short-Term Tax-Exempt Bond ETF (VTES).
Key metrics
VGSH has a 0.03% expense ratio and 3.8% dividend yield versus VTES's 0.05% expense ratio and 2.7% dividend yield as of 2026-10-15.
Risk profile
VGSH has a 1.2% max drawdown over three years and 1.9 years of duration, while VTES has a 3.0% max drawdown and 7.3 years of duration.
What's inside
VGSH tracks U.S. Treasury bonds with minimal credit risk, while VTES samples municipal bonds for tax-exempt income using an ESG screen.
Which to choose
Choose VGSH for capital preservation if you need liquidity soon; choose VTES for tax-free income if you tolerate higher risk.
In short
Vanguard Short-Term Treasury ETF (VGSH) provides higher yield and lower risk for conservative investors seeking tax-free income.
