# Vanguard Short-Term Treasury ETF vs Tax-Exempt Bond ETF

> Which short-term bond ETF offers better tax efficiency and lower risk?
- Title: Vanguard Short-Term Treasury ETF vs Tax-Exempt Bond ETF
- Summary: 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…
- Keywords: vanguard, vgsh, vtes, treasury, tax-exempt, municipal bonds, etf, yield, expense ratio, finance, money, Short-Term
- Source: The Motley Fool — https://fool.com/coverage/etfs/2026/10/21/vanguard-short-term-treasury-etf-vs-tax-exempt-bond-etf
- Author: Dana George
- Published: 2026-10-21T23:00:02+00:00
- Read time: 1 min
- Topics: vanguard, vgsh, vtes, treasury, tax-exempt, municipal bonds, etf, yield, expense ratio, finance, money
## 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.
## Key takeaway

Vanguard Short-Term Treasury ETF (VGSH) provides higher yield and lower risk for conservative investors seeking tax-free income.