The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IAU is a iShares N/A fund. So, what’s the difference between AGG and IAU? And which fund is better?
The expense ratio of AGG is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%). AGG is mostly comprised of AAA bonds while IAU has a high exposure to the technology sector. Overall, AGG has provided lower returns than IAU over the past ten years.
In this article, we’ll compare AGG vs. IAU. We’ll look at risk metrics and industry exposure, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss AGG’s and IAU’s fund composition, performance, and holdings and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
AGG’s dividend yield is 1.95% higher than that of IAU (1.95% vs. 0.0%). Also, AGG yielded on average 1.99% less per year over the past decade (4.04% vs. 6.03%). The expense ratio of AGG is 0.21 percentage points lower than IAU’s (0.04% vs. 0.25%).
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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.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Standard Deviation of 3.03 with a Alpha of -0.08 and a R-squared of 99.96. Its Beta is 1.01 while AGG’s Sharpe Ratio is 0.9. Furthermore, the fund has a Treynor Ratio of 2.7 and a Mean Return of 0.28.
The iShares Gold Trust (IAU) has a R-squared of 16.03 with a Sharpe Ratio of 0.13 and a Standard Deviation of 16.97. Its Mean Return is 0.23 while IAU’s Beta is 0.48. Furthermore, the fund has a Alpha of 4.16 and a Treynor Ratio of 1.5.
AGG’s Mean Return is 0.05 points higher than that of IAU and its R-squared is 83.93 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IAU. The Alpha and Beta of AGG are 4.24 points lower and 0.53 points higher than IAU’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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
AGG’s CAGR is 1.99 percentage points lower than that of IAU and as a result, would have yielded $1,418 less on a $10,000 investment. Thus, AGG performed worse than IAU by 1.99% annually.
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