AGG vs. DIA: What’s The Difference?

The iShares Core U.S. Aggregate Bond ETF (AGG) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and DIA is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between AGG and DIA? And which fund is better?

The expense ratio of AGG is 0.12 percentage points lower than DIA’s (0.04% vs. 0.16%). AGG is mostly comprised of AAA bonds while DIA has a high exposure to the financial services sector. Overall, AGG has provided lower returns than DIA over the past ten years.

In this article, we’ll compare AGG vs. DIA. We’ll look at industry exposure and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss AGG’s and DIA’s annual returns, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

AGG DIA
Name iShares Core U.S. Aggregate Bond ETF SPDR Dow Jones Industrial Average ETF Trust
Category Intermediate-Term Bond Large Value
Issuer iShares SPDR State Street Global Advisors
AUM 88.8B 30.46B
Avg. Return 4.04% 13.35%
Div. Yield 1.95% 1.61%
Expense Ratio 0.04% 0.16%

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 SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

AGG’s dividend yield is 0.34% higher than that of DIA (1.95% vs. 1.61%). Also, AGG yielded on average 9.31% less per year over the past decade (4.04% vs. 13.35%). The expense ratio of AGG is 0.12 percentage points lower than DIA’s (0.04% vs. 0.16%).

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Fund Composition

Holdings

AGG - Holdings

AGG Bond Sectors Weight
AAA 68.92%
BBB 15.38%
A 11.16%
AA 2.92%
Others 1.63%
Below B 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

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.

DIA - Holdings

DIA Holdings Weight
UnitedHealth Group Inc 7.63%
Goldman Sachs Group Inc 7.23%
The Home Depot Inc 6.07%
Microsoft Corp 5.16%
Salesforce.com Inc 4.65%
Amgen Inc 4.64%
Boeing Co 4.56%
Visa Inc Class A 4.45%
McDonald’s Corp 4.4%
Honeywell International Inc 4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

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Risk Analysis

AGG DIA
Mean Return 0.28 1.13
R-squared 99.96 93.31
Std. Deviation 3.03 13.68
Alpha -0.08 -0.94
Beta 1.01 0.97
Sharpe Ratio 0.9 0.94
Treynor Ratio 2.7 13.07

The iShares Core U.S. Aggregate Bond ETF (AGG) has a Beta of 1.01 with a Mean Return of 0.28 and a Sharpe Ratio of 0.9. Its Alpha is -0.08 while AGG’s Treynor Ratio is 2.7. Furthermore, the fund has a Standard Deviation of 3.03 and a R-squared of 99.96.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a Standard Deviation of 13.68 with a Mean Return of 1.13 and a Treynor Ratio of 13.07. Its Alpha is -0.94 while DIA’s Beta is 0.97. Furthermore, the fund has a R-squared of 93.31 and a Sharpe Ratio of 0.94.

AGG’s Mean Return is 0.85 points lower than that of DIA and its R-squared is 6.65 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than DIA. The Alpha and Beta of AGG are 0.86 points higher and 0.04 points higher than DIA’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. DIA - Annual Returns

Year AGG DIA
2020 7.42% 9.63%
2019 8.68% 25.09%
2018 -0.05% -3.6%
2017 3.53% 27.97%
2016 2.56% 16.28%
2015 0.48% 0.1%
2014 6.04% 9.88%
2013 -2.15% 29.41%
2012 4.04% 10.04%
2011 7.58% 8.21%
2010 6.3% 13.87%

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 2013 was the strongest year for DIA, returning 29.41% on an annual basis. The poorest year for DIA in the last ten years was 2018, with a yield of -3.6%. Most years the SPDR Dow Jones Industrial Average ETF Trust has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 9.88%, 10.04%, and 13.87% respectively.

Portfolio Growth

AGG vs. DIA - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $15,368 4.04%
DIA $10,000 $37,965 13.35%

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 DIA, the end total would have been $37,965. This equates to a $27,965 profit over 11 years and a compound annual growth rate (CAGR) of 13.35%.

AGG’s CAGR is 9.31 percentage points lower than that of DIA and as a result, would have yielded $22,597 less on a $10,000 investment. Thus, AGG performed worse than DIA by 9.31% annually.


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