LQD vs USIG: Which ETF Is Better in 2026?
A metric-by-metric comparison of iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and iShares Broad USD Investment Grade Corporate Bond ETF (USIG) — both US Bonds - Corporate funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
LQD and USIG are close to the same fund wearing different labels. Both sit in the US Bonds - Corporate category and their daily returns move almost identically, so this is not really a question of which fund is better — it is a question of which one is cheaper to own and easier to trade in your account. Everything below is about finding the small, structural edges, because the investment exposure is a wash.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — USIG scores higher: 57.1 (Grade C) versus 55.0 for LQD. That doesn't make LQD a bad fund; it means USIG currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| LQD | USIG | |
|---|---|---|
| Category | US Bonds - Corporate | US Bonds - Corporate |
| Expense ratio | 0.14% | 0.04% |
| Fund size (AUM) | $33.1B | $17.6B |
| Dividend yield | 3.00% | 4.72% |
| 1-year return | +2.12% | +3.00% |
| 3-year return | +12.52% | +15.07% |
| Volatility | 5.29% | 4.09% |
| Max drawdown | -8.15% | -5.88% |
| Sharpe ratio | -0.54 | -0.49 |
| ETFValuer score | 55.0 | 57.1 |
| Grade | C | C |
| Overall rank | #325 | #297 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
USIG is the cheaper fund, charging 0.04% a year versus 0.14% for LQD — a gap of 0.10 percentage points (about $10.00/year on a $10,000 position) that compounds meaningfully over a multi-decade holding period. Since these two deliver almost the same exposure, that fee gap is close to the entire difference between them — it comes straight out of your return with nothing offered in exchange. See the ETF Fee Calculator for the exact dollar impact at your investment size and horizon.
What LQD's Fees Cost You
LQD charges an expense ratio of 0.14% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, USIG returned +15.07% versus +12.52% for LQD — a gap of about 2.6 percentage points. On risk, USIG has held up better historically, with a shallower max drawdown (-5.88% vs. -8.15%). USIG currently has the better risk-adjusted return (Sharpe ratio of -0.49 vs. -0.54), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), LQD and USIG show a near-perfect correlation of 0.994 — functionally interchangeable. At this level the two funds are, for practical purposes, the same investment. Owning both adds no diversification whatsoever — the decision should come down entirely to cost, spread and which one your broker handles better.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.994 | Near-perfect — functionally interchangeable |
| R-squared | 98.9% | 98.9% of LQD's daily moves are explained by USIG's |
| Tracking error (annualised) | 1.77% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | LQD +4.09% · USIG +4.91% | USIG ahead by 0.82 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, LQD finished as much as +1.9 points ahead of USIG at the best extreme and -1.9 points at the worst — a 3.8-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
LQD and USIG hold 6 of the same companies among their top 10 positions. Those shared names make up 8.2% of LQD and 9.9% of USIG. That's meaningful duplication. The funds aren't interchangeable, but a good share of your money would be riding on the same companies twice.
| Shared Holding | LQD Weight | USIG Weight |
|---|---|---|
| BlackRock Funds III | 7.23% | 9.42% |
| META PLATFORMS INC | 0.31% | 0.06% |
| GOLDMAN SACHS GROUP INC | 0.15% | 0.20% |
| ANHEUSER-BUSCH CO/INBEV | 0.20% | 0.09% |
| CVS HEALTH CORP | 0.17% | 0.08% |
| T-MOBILE USA INC | 0.16% | 0.07% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean LQD if…
- You have no strong preference — LQD is a perfectly reasonable default here
Lean USIG if…
- You want the lower running cost — 0.04% vs 0.14%, about $10 a year less on a $10,000 position
- Current income matters to you — it yields 4.72% against 3.00%
- It has been the calmer ride (4.1% volatility vs 5.3%) with a shallower worst-case fall (-5.9% vs -8.2%)
- You weight recent results heavily — it returned 15.1% over 3 years against 12.5%
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is LQD or USIG better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — USIG scores higher: 57.1 (Grade C) versus 55.0 for LQD. That doesn't make LQD a bad fund; it means USIG currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, LQD or USIG?
USIG currently has the lower expense ratio (0.04% vs. 0.14%).
Can I hold both LQD and USIG?
You can, but there's little point. LQD and USIG have a daily return correlation of 0.99 over the past 3.0 years, meaning they move almost in lockstep. Holding both roughly doubles a single bet rather than spreading it — pick whichever wins on cost and liquidity and put the money in one place.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.