Higher Yield or Tax-Free Income? Deciding Between IGIB and MUB

By Eric Trie – Updated Mar 2, 2026 at 3:54PM ESTKey PointsIGIB charges a slightly lower expense ratio and offers a higher yield than MUBIGIB has delivered stronger one-year returns but experienced a deeper five-year drawdownBoth funds hold thousands of bonds, but MUB focuses on municipal debt while IGIB targets investment-grade corporatesThe iShares 5-10 Year Investment Grade Corporate Bond ETF (NASDAQ:IGIB) carries a marginally lower cost and higher yield than the iShares National Muni Bond ETF (NYSEMKT:MUB), but comes with greater risk and a different bond mix.MUB and IGIB both offer diversified fixed income exposure, but their portfolios differ.MUB holds U.S. municipal bonds, often appealing to those seeking potential tax advantages, while IGIB targets intermediate-term investment-grade corporate bonds. This comparison breaks down cost, returns, risk, and portfolio construction to help investors gauge which approach may better fit their needs.Snapshot (cost & size)MetricMUBIGIBIssuerISharesISharesExpense ratio0.05%0.04%1-yr return (as of Feb. 27, 2026)1.4%3.8%Dividend yield3.1%4.6%Beta0.911.06AUM$42.5 billion$17.82 billionBeta 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.IGIB is slightly more affordable with a 0.04% expense ratio compared to MUB’s 0.05%, and also offers a higher yield, which may appeal to those seeking more income from their bond allocation.Performance & risk comparisonMetricMUBIGIBMax drawdown (5 y)-11.88%-20.63%Growth of $1,000 over 5 years$944$905What's insideIGIB holds over 3,000 U.S. investment-grade corporate bonds with maturities between five and ten years, offering broad exposure to high-quality companies across sectors. Its largest stakes, such as Meta Platforms Inc 11/15/2035 and two Bank Of America Corp Mtn issues, are each less than 0.3% of assets, helping to reduce single-issuer risk. The fund has been operating for over 19 years, and its focus on corporates means credit risk is a primary driver of returns, with no exposure to municipal bonds or their potential tax benefits.MUB, on the other hand, invests in more than 6,200 tax-exempt municipal bonds, including securities like Blackrock Liq Municash Cl Ins Mmf and long-dated issues from the University of Texas and the State of Connecticut. This municipal focus can make MUB attractive to those seeking federally tax-free income, while its risk profile tends to be lower than that of a corporate bond fund like IGIB.For more guidance on ETF investing, check out the full guide at this link.What this means for investorsBond investors comparing municipal and corporate funds may see similar yields, yet they face different income and tax questions. One focuses on stated income, the other on after-tax income and how it changes with economic conditions. This is the practical distinction between the iShares 5–10 Year Investment Grade Corporate Bond ETF and the iShares National Muni Bond ETF.IGIB is linked to corporate credit markets. Its higher yield compensates for lending to companies, and its results depend on company financial health and interest rates. MUB is connected to municipal issuers and generally provides income exempt from federal taxes. This tax benefit is valuable in taxable accounts, where after-tax income can reduce or close the yield gap. The risks differ: corporate bonds react more to economic slowdowns, while municipal bonds are affected by government finances and tax needs.For investors, the main question is not which yield is higher right now, but which type of investment fits best in a taxable portfolio. IGIB offers corporate income tied to business performance and intermediate credit exposure. MUB offers federally tax-exempt income shaped by municipal credit and tax policy. The appropriate allocation will depend on whether higher nominal income or tax efficiency better supports your overall portfolio objectives.Read NextFeb 8, 2026 •By Adé HennisDoes MUB's Tax Exemptions Give It the Edge Over IEI? Jan 26, 2026 •By Eric TrieTreasuries or Munis: VGIT vs. MUB for Conservative PortfoliosJan 26, 2026 •By Adé HennisThis Tax-Friendly Bond ETF May Have the Edge Over This Corporate Bond ETFJan 25, 2026 •By Adé HennisThis Bond ETF Has a Special Tax Advantage Over One of Fidelity's Top Bond FundJan 24, 2026 •By Sara AppinoBond ETFs: Your Tax Bracket Decides the Winner Between AGG and MUBFeb 10, 2014 •By Dan CaplingerHow Bonds Could Beat the Dow in 2014About the AuthorEric Trie is a Motley Fool contributing stock analyst covering technology and semiconductors, healthcare, financial services, and consumer sectors. Previously, he worked in investment analysis and financial writing. He holds a B.A. in Philosophy from Rutgers University. Eric lives in New York City and is an avid sports fan.CMFIdeaMachineStocks MentionediShares Trust - iShares National Muni Bond ETFNYSEMKT: MUB$108.27(-0.33%)-$0.36iShares Trust - iShares 5-10 Year Investment Grade Corporate Bond ETFNASDAQ: IGIB$54.11(-0.34%)-$0.19*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.