The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IUSB is a iShares N/A fund. So, what’s the difference between AGG and IUSB? And which fund is better?
The expense ratio of AGG is 0.02 percentage points lower than IUSB’s (0.04% vs. 0.06%). AGG is mostly comprised of AAA bonds and IUSB has a high exposure to AAA bond. Overall, AGG has provided lower returns than IUSB over the past ten years.
In this article, we’ll compare AGG vs. IUSB. We’ll look at portfolio growth and annual returns, as well as at their fund composition and holdings. Moreover, I’ll also discuss AGG’s and IUSB’s industry exposure, performance, and risk metrics and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Core Total USD Bond Market ETF|
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 Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
AGG’s dividend yield is 0.15% lower than that of IUSB (1.95% vs. 2.1%). Also, AGG yielded on average 0.09% less per year over the past decade (4.04% vs. 4.13%). The expense ratio of AGG is 0.02 percentage points lower than IUSB’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.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
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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 Mean Return of 0.28. Its Beta is 1.01 while AGG’s Treynor Ratio is 2.7. Furthermore, the fund has a R-squared of 99.96 and a Sharpe Ratio of 0.9.
The iShares Core Total USD Bond Market ETF (IUSB) has a Alpha of 0 with a Treynor Ratio of 0 and a Beta of 0. Its R-squared is 0 while IUSB’s Mean Return is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
AGG’s Mean Return is 0.28 points higher than that of IUSB and its R-squared is 99.96 points higher. With a Standard Deviation of 3.03, AGG is slightly more volatile than IUSB. The Alpha and Beta of AGG are 0.08 points lower and 1.01 points higher than IUSB’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 IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% 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 IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
AGG’s CAGR is 0.09 percentage points lower than that of IUSB and as a result, would have yielded $255 less on a $10,000 investment. Thus, AGG performed worse than IUSB by 0.09% annually.
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