ETF Comparison

BND vs SHY: Which Is the Better Pick in 2026?

A head-to-head comparison of Vanguard Total Bond Market ETF and iShares 1-3 Year Treasury Bond ETF covering yield, cost, risk, and income potential.

Data updated July 4, 2026

Vanguard

ETFs115

Total AUM$4484B

ETFs and AUM reflect what Dividend Vision tracks — the issuer's full lineup may be larger.

Vanguard is known for offering low-cost, passively managed ETFs that emphasize broad market exposure and long-term investing. The company operates 175 ETFs across diverse fund families including Index, Bond, Equity, Dividend, Income, International, Factor, and ESG strategies, serving investors with various goals from core portfolio building to specialized income generation. Notable for its scale and popular tickers like VB (total U.S. small-cap), BND (total bond market), and VBIAX (international bonds), Vanguard focuses on providing comprehensive, index-based investment solutions with an emphasis on cost efficiency and accessibility.

See our curated list of related YouTube videos on BND.

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iShares

ETFs481

Total AUM$4451B

ETFs and AUM reflect what Dividend Vision tracks — the issuer's full lineup may be larger.

iShares is one of the largest ETF providers globally, known for offering a broad, diversified lineup of exchange-traded funds across multiple asset classes and investment strategies. The company operates 215 funds spanning 15 distinct families, including popular offerings in dividend income, covered call strategies, bonds, equities, ESG-focused investments, and factor-based approaches, with widely-held tickers like AGG (bond), ACWI (global equity), and AOA (allocation). iShares is characterized by its comprehensive fund ecosystem that serves both core portfolio holdings and specialized investment strategies, making it a prominent player for investors seeking both traditional and alternative income-generating ETF solutions.

See our curated list of related YouTube videos on SHY.

See all iShares ETFs

Side-by-side snapshot

	BND	SHY
Full name	Vanguard Total Bond Market ETF	iShares 1-3 Year Treasury Bond ETF
Issuer	Vanguard	iShares
Last Close	$73.11 as of July 4, 2026	$81.94 as of July 4, 2026
Distribution yield	4.01%	3.49%
Distribution Safety Score	100	70
Expense ratio	0.03%	0.15%
AUM	$158B	$25.3B
Distribution frequency	Monthly	Monthly
Underlying index	Bloomberg U.S. Aggregate Float Adjusted Index	ICE U.S. Treasury 1-3 Year Bond Index
Objective	Track the Bloomberg U.S. Aggregate Float Adjusted Index for broad U.S. bond exposure.	Tracks the ICE U.S. Treasury 1-3 Year Bond Index.
Asset class	Fixed Income	Fixed Income
Inception date	04/03/2007	07/22/2002
Beta	0.98	0.23
Last dividend	$0.2445	$0.2383
Ex-dividend date	07/01/2026	08/03/2026

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Visual comparison

Key metrics

Projected income on $10K

Projections assume the current yield and share price remain constant. Actual results will vary.

Total returns

BND has outpaced SHY over the trailing twelve months, posting a 3.34% total return against 2.37%. The picture flips over 10 years, though — SHY has compounded at 1.57% a year, ahead of BND at 1.41%. SHY has been the steadier holding, though — annualized volatility of 1.7% against 5.3% for BND. Figures are total returns: price change plus every distribution reinvested.

Symbol	YTD	1Y	3Y	5Y	10Y	Since Apr 2007	Volatility	Sharpe	Sortino	Max drawdown
BND	0.38%	3.34%	4.07%	-0.05%	1.41%	3.02%	5.3%	-0.09	-0.13	-5.9%
SHY	0.05%	2.37%	4.08%	1.68%	1.57%	1.82%	1.7%	-0.28	-0.40	-1.0%

Total return with all distributions reinvested on the ex-dividend date, split-adjusted, as of July 2, 2026. YTD and 1Y are cumulative; longer windows are annualized. “Since Apr 2007” measures every fund from April 10, 2007 — the youngest fund's first trading day — so all funds share one comparison window. Volatility is the annualized standard deviation of daily total returns over the trailing 3 years. Sharpe and Sortino divide the annualized return in excess of the risk-free rate by, respectively, that volatility and the downside deviation (both over the trailing 3 years) — higher is better. Max drawdown is the largest peak-to-trough total-return decline over the same window — shallower is better.

Quick verdict

BND (Vanguard Total Bond Market ETF) and SHY (iShares 1-3 Year Treasury Bond ETF) are both monthly-pay dividend ETFs, but they take different approaches.

BND offers the higher yield at 4.01% vs 3.49% for SHY. A higher yield means more current income per dollar invested, though it may come with different risk characteristics.

BND is cheaper with an expense ratio of 0.03% compared to 0.15%.

They track different benchmarks: BND is linked to Bloomberg U.S. Aggregate Float Adjusted Index while SHY tracks ICE U.S. Treasury 1-3 Year Bond Index, which means their performance drivers differ.

BND is the larger fund by assets ($158B), which generally means tighter spreads and better liquidity.

Deep dive

Yield & income

On a $10,000 investment, BND would generate roughly $33.42/month, while SHY would produce $29.08/month, at current distribution rates. Both pay monthly distributions.

BND yield4.01%

SHY yield3.49%

Monthly diff on $10K$4.33

Cost & efficiency

Over 10 years on $10,000, BND would cost approximately $30 in fees vs $150 for SHY (simplified, not compounded). The $120.00 difference may be offset by yield or performance.

BND ER0.03%

SHY ER0.15%

Strategy & risk

BND tracks Bloomberg U.S. Aggregate Float Adjusted Index with a bonds approach, while SHY tracks ICE U.S. Treasury 1-3 Year Bond Index with a basket approach. Beta is 0.98 for BND and 0.23 for SHY, indicating SHY is less volatile relative to the market.

BND beta0.98

SHY beta0.23

Fund details

BND is managed by Vanguard (launched 04/03/2007) with $158B in assets. SHY is managed by iShares (launched 07/22/2002) with $25.3B in assets.

BND AUM$158B

SHY AUM$25.3B

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Frequently asked questions

Is BND or SHY better for dividend income?

It depends on your goals. BND currently offers the higher distribution yield, which means more income per dollar invested. However, a lower-yield fund may offer better total return or lower volatility. Consider your time horizon and risk tolerance.

What is the difference between BND and SHY?

BND (Vanguard Total Bond Market ETF) tracks Bloomberg U.S. Aggregate Float Adjusted Index with a bonds approach, while SHY (iShares 1-3 Year Treasury Bond ETF) tracks ICE U.S. Treasury 1-3 Year Bond Index with a basket approach. They are issued by Vanguard and iShares respectively.

Can I hold both BND and SHY?

Yes. Many income investors hold both to diversify across different strategies and underlying indexes. This can reduce concentration risk while maintaining a strong income stream.

Which has lower fees, BND or SHY?

BND has an expense ratio of 0.03% while SHY charges 0.15%. Lower fees mean more of your investment returns stay in your pocket over time.

How much income does $10,000 in BND vs SHY generate?

At current rates, $10,000 in BND would generate roughly $33.42 per month ($401.00 annually). The same in SHY would produce about $29.08 per month ($349.00 annually).

Which has performed better historically, BND or SHY?

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BND vs SHY — at a glance

Generated June 2026 from current fund data.

Overview

BND and SHY are both broad index-tracking bond ETFs, but they track opposite ends of the yield curve and credit spectrum. BND holds the entire U.S. investment-grade bond market—Treasuries, corporate bonds, mortgage-backed securities—weighted by market value. SHY holds only U.S. Treasury securities with 1–3 year maturities. The biggest practical difference: BND offers higher current yield and longer duration risk; SHY sacrifices yield for near-Treasury credit quality and minimal interest-rate sensitivity.

How they differ

BND's Bloomberg Aggregate index includes corporate bonds, Treasuries, and mortgage-backed securities across all maturities. SHY holds only short-dated Treasuries (1–3 years), so it has almost no duration risk—a beta of 0.23 versus BND's 0.98. That maturity difference explains the yield gap: BND distributes 4.03% annually while SHY yields 3.55%. SHY's expense ratio of 0.15% is five times BND's 0.03%, though both are dirt cheap in absolute terms. AUM tells a different story: BND is a $158B behemoth; SHY is $25.3B, still substantial but a fraction of the size.

Who each is best for

BND: Fits investors seeking broad, diversified exposure to the U.S. bond market and willing to tolerate moderate duration risk in exchange for higher current income and a true market-cap-weighted benchmark.

SHY: Fits investors prioritizing capital stability and minimal interest-rate volatility—those who want bond exposure with Treasury credit quality and are comfortable accepting lower yield for reduced price swings when rates move.

Key risks to know

Duration and rate risk (BND): A one-percentage-point rise in long-term rates can erode BND's NAV by roughly 5–8%, depending on the maturity mix. SHY's short duration means the same move would cause minimal price loss.

Credit risk (BND): Exposure to investment-grade corporate and mortgage-backed securities means BND carries implicit credit and prepayment risk absent from SHY's Treasury-only portfolio. Corporate bond spreads can widen sharply in a recession.

Reinvestment risk (SHY): At a 3.55% yield and 1–3 year maturity, holders face frequent reinvestment decisions as principal rolls off. In a declining-rate environment, that matures cash may not find comparable yields.

Opportunity cost in a rising-yield environment (BND): BND's higher current distribution can mask NAV losses when longer-dated bonds fall; total return may lag cash or very short-duration bonds for extended periods.

Bottom line

If you want maximum income and true market-wide diversification from the U.S. bond market, BND's 4.03% yield and 0.03% expense ratio stand out. If you prioritize safety and hate watching your principal fluctuate with interest-rate moves, SHY's Treasury-only portfolio and 0.23 beta offer stability at the cost of yield. Past performance doesn't predict future results.

AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.