The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Core Dividend Growth ETF (DGRO) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and DGRO is a iShares Large Value fund. So, what’s the difference between AGG and DGRO? And which fund is better?
The expense ratio of AGG is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%). AGG is mostly comprised of AAA bonds while DGRO has a high exposure to the technology sector. Overall, AGG has provided lower returns than DGRO over the past ten years.
In this article, we’ll compare AGG vs. DGRO. We’ll look at annual returns and performance, as well as at their holdings and industry exposure. Moreover, I’ll also discuss AGG’s and DGRO’s risk metrics, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Core Dividend Growth ETF|
|Category||Intermediate-Term Bond||Large Value|
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 iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.
AGG’s dividend yield is 0.09% lower than that of DGRO (1.95% vs. 2.04%). Also, AGG yielded on average 8.42% less per year over the past decade (4.04% vs. 12.46%). The expense ratio of AGG is 0.04 percentage points lower than DGRO’s (0.04% vs. 0.08%).
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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.
|Johnson & Johnson||2.87%|
|Procter & Gamble Co||2.79%|
|Verizon Communications Inc||2.68%|
|JPMorgan Chase & Co||2.57%|
|The Home Depot Inc||2.35%|
|Merck & Co Inc||2.11%|
|Cisco Systems Inc||1.98%|
DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.
Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Beta of 1.01 with a Sharpe Ratio of 0.9 and a R-squared of 99.96. Its Alpha is -0.08 while AGG’s Mean Return is 0.28. Furthermore, the fund has a Standard Deviation of 3.03 and a Treynor Ratio of 2.7.
The iShares Core Dividend Growth ETF (DGRO) has a Standard Deviation of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Beta is 0 while DGRO’s R-squared is 0. Furthermore, the fund has a Alpha of 0 and a Treynor Ratio of 0.
AGG’s Mean Return is 0.28 points higher than that of DGRO and its R-squared is 99.96 points higher. With a Standard Deviation of 3.03, AGG is slightly more volatile than DGRO. The Alpha and Beta of AGG are 0.08 points lower and 1.01 points higher than DGRO’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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in AGG would have resulted in a final balance of $12,449. This is a profit of $2,449 over 6 years and amounts to a compound annual growth rate (CAGR) of 4.04%.
With a $10,000 investment in DGRO, the end total would have been $19,580. This equates to a $9,580 profit over 6 years and a compound annual growth rate (CAGR) of 12.46%.
AGG’s CAGR is 8.42 percentage points lower than that of DGRO and as a result, would have yielded $7,131 less on a $10,000 investment. Thus, AGG performed worse than DGRO by 8.42% annually.
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