The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Core S&P Small-Cap ETF (IJR) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IJR is a iShares Small Blend fund. So, what’s the difference between AGG and IJR? And which fund is better?
The expense ratio of AGG is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%). AGG is mostly comprised of AAA bonds while IJR has a high exposure to the industrials sector. Overall, AGG has provided lower returns than IJR over the past ten years.
In this article, we’ll compare AGG vs. IJR. We’ll look at portfolio growth and performance, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss AGG’s and IJR’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Core S&P Small-Cap ETF|
|Category||Intermediate-Term Bond||Small Blend|
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 S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.
AGG’s dividend yield is 0.99% higher than that of IJR (1.95% vs. 0.96%). Also, AGG yielded on average 9.93% less per year over the past decade (4.04% vs. 13.97%). The expense ratio of AGG is 0.02 percentage points lower than IJR’s (0.04% vs. 0.06%).
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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.
|BlackRock Cash Funds Treasury SL Agency||1.08%|
|GameStop Corp Class A||0.86%|
|Power Integrations Inc||0.57%|
|Chart Industries Inc||0.53%|
IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.
Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Beta of 1.01 with a Standard Deviation of 3.03 and a R-squared of 99.96. Its Mean Return is 0.28 while AGG’s Sharpe Ratio is 0.9. Furthermore, the fund has a Alpha of -0.08 and a Treynor Ratio of 2.7.
The iShares Core S&P Small-Cap ETF (IJR) has a Standard Deviation of 18.68 with a R-squared of 76.03 and a Mean Return of 1.21. Its Beta is 1.2 while IJR’s Alpha is -3.7. Furthermore, the fund has a Treynor Ratio of 10.77 and a Sharpe Ratio of 0.74.
AGG’s Mean Return is 0.93 points lower than that of IJR and its R-squared is 23.93 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IJR. The Alpha and Beta of AGG are 3.62 points higher and 0.19 points lower than IJR’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 2013 was the strongest year for IJR, returning 41.36% on an annual basis. The poorest year for IJR in the last ten years was 2018, with a yield of -8.43%. Most years the iShares Core S&P Small-Cap ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 11.24%, 13.2%, and 16.28% 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 IJR, the end total would have been $38,800. This equates to a $28,800 profit over 11 years and a compound annual growth rate (CAGR) of 13.97%.
AGG’s CAGR is 9.93 percentage points lower than that of IJR and as a result, would have yielded $23,432 less on a $10,000 investment. Thus, AGG performed worse than IJR by 9.93% annually.
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