The iShares Core U.S. Aggregate Bond ETF (AGG) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between AGG and BSV? And which fund is better?
The expense ratio of AGG is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%). AGG is mostly comprised of AAA bonds and BSV has a high exposure to AAA bond. Overall, AGG has provided higher returns than BSV over the past ten years.
In this article, we’ll compare AGG vs. BSV. We’ll look at fund composition and performance, as well as at their holdings and risk metrics. Moreover, I’ll also discuss AGG’s and BSV’s portfolio growth, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||Vanguard Short-Term Bond Index Fund ETF Shares|
|Category||Intermediate-Term Bond||Short-Term Bond|
The iShares Core U.S. Aggregate Bond ETF (AGG) is a Intermediate-Term Bond fund that is issued by iShares. It currently has 88.8B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.95% with an expense ratio of 0.04%.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
AGG’s dividend yield is 0.47% higher than that of BSV (1.95% vs. 1.48%). Also, AGG yielded on average 1.77% more per year over the past decade (4.04% vs. 2.27%). The expense ratio of AGG is 0.01 percentage points lower than BSV’s (0.04% vs. 0.05%).
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|AGG Bond Sectors||Weight|
AGG’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 68.92%, 15.38%, 11.16%, 2.92%, and 1.63%. The fund is less weighted towards Below B (0.0%), B (0.0%), and BB (0.0%) rated bonds.
|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Beta of 1.01 with a Treynor Ratio of 2.7 and a Alpha of -0.08. Its R-squared is 99.96 while AGG’s Mean Return is 0.28. Furthermore, the fund has a Sharpe Ratio of 0.9 and a Standard Deviation of 3.03.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Mean Return of 0.16 with a Sharpe Ratio of 0.98 and a Alpha of 0.21. Its Standard Deviation is 1.33 while BSV’s Beta is 0.38. Furthermore, the fund has a Treynor Ratio of 3.33 and a R-squared of 78.38.
AGG’s Mean Return is 0.12 points higher than that of BSV and its R-squared is 21.58 points higher. With a Standard Deviation of 3.03, AGG is slightly more volatile than BSV. The Alpha and Beta of AGG are 0.29 points lower and 0.63 points higher than BSV’s Alpha and Beta.
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AGG had its best year in 2019 with an annual return of 8.68%. AGG’s worst year over the past decade yielded -2.15% and occurred in 2013. In most years the iShares Core U.S. Aggregate Bond ETF provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.53%, 4.04%, and 6.04% respectively.
The year 2019 was the strongest year for BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in AGG would have resulted in a final balance of $15,368. This is a profit of $5,368 over 11 years and amounts to a compound annual growth rate (CAGR) of 4.04%.
With a $10,000 investment in BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
AGG’s CAGR is 1.77 percentage points higher than that of BSV and as a result, would have yielded $2,583 more on a $10,000 investment. Thus, AGG outperformed BSV by 1.77% annually.
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