The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares S&P 500 Value ETF (IVE) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IVE is a iShares Large Value fund. So, what’s the difference between AGG and IVE? And which fund is better?
The expense ratio of AGG is 0.14 percentage points lower than IVE’s (0.04% vs. 0.18%). AGG is mostly comprised of AAA bonds while IVE has a high exposure to the financial services sector. Overall, AGG has provided lower returns than IVE over the past ten years.
In this article, we’ll compare AGG vs. IVE. We’ll look at fund composition and annual returns, as well as at their performance and risk metrics. Moreover, I’ll also discuss AGG’s and IVE’s holdings, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares S&P 500 Value 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 S&P 500 Value ETF (IVE) is a Large Value fund that is issued by iShares. It currently has 22.4B total assets under management and has yielded an average annual return of 11.68% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.18%.
AGG’s dividend yield is 0.07% higher than that of IVE (1.95% vs. 1.88%). Also, AGG yielded on average 7.65% less per year over the past decade (4.04% vs. 11.68%). The expense ratio of AGG is 0.14 percentage points lower than IVE’s (0.04% vs. 0.18%).
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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.
|Berkshire Hathaway Inc Class B||3.05%|
|JPMorgan Chase & Co||2.65%|
|The Walt Disney Co||1.85%|
|Bank of America Corp||1.67%|
|Johnson & Johnson||1.57%|
|Exxon Mobil Corp||1.41%|
|Cisco Systems Inc||1.35%|
|Verizon Communications Inc||1.33%|
IVE’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, The Walt Disney Co, Bank of America Corp, and Johnson & Johnson at 3.05%, 2.65%, 1.85%, 1.67%, and 1.57%.
Exxon Mobil Corp (1.41%), Pfizer Inc (1.38%), and Cisco Systems Inc (1.35%) have a slightly smaller but still significant weight. Verizon Communications Inc and Intel Corp are also represented in the IVE’s holdings at 1.33% and 1.25%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Mean Return of 0.28 with a R-squared of 99.96 and a Treynor Ratio of 2.7. Its Beta is 1.01 while AGG’s Standard Deviation is 3.03. Furthermore, the fund has a Sharpe Ratio of 0.9 and a Alpha of -0.08.
The iShares S&P 500 Value ETF (IVE) has a Standard Deviation of 14.3 with a Mean Return of 1.05 and a Sharpe Ratio of 0.83. Its Beta is 1.01 while IVE’s R-squared is 92.08. Furthermore, the fund has a Alpha of -2.9 and a Treynor Ratio of 11.41.
AGG’s Mean Return is 0.77 points lower than that of IVE and its R-squared is 7.88 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IVE. The Alpha and Beta of AGG are 2.82 points higher and 0.00 points lower than IVE’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 IVE, returning 31.71% on an annual basis. The poorest year for IVE in the last ten years was 2018, with a yield of -9.09%. Most years the iShares S&P 500 Value ETF has given investors modest returns, such as in 2014, 2010, and 2017, when gains were 12.14%, 14.9%, and 15.19% 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 IVE, the end total would have been $31,350. This equates to a $21,350 profit over 11 years and a compound annual growth rate (CAGR) of 11.68%.
AGG’s CAGR is 7.65 percentage points lower than that of IVE and as a result, would have yielded $15,982 less on a $10,000 investment. Thus, AGG performed worse than IVE by 7.65% annually.
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