The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Russell 1000 Value ETF (IWD) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IWD is a iShares Large Value fund. So, what’s the difference between AGG and IWD? And which fund is better?
The expense ratio of AGG is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%). AGG is mostly comprised of AAA bonds while IWD has a high exposure to the financial services sector. Overall, AGG has provided lower returns than IWD over the past ten years.
In this article, we’ll compare AGG vs. IWD. We’ll look at annual returns and holdings, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss AGG’s and IWD’s risk metrics, performance, and fund composition and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Russell 1000 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 Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
AGG’s dividend yield is 0.38% higher than that of IWD (1.95% vs. 1.57%). Also, AGG yielded on average 7.36% less per year over the past decade (4.04% vs. 11.40%). The expense ratio of AGG is 0.15 percentage points lower than IWD’s (0.04% vs. 0.19%).
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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||2.58%|
|JPMorgan Chase & Co||2.25%|
|Johnson & Johnson||2.24%|
|UnitedHealth Group Inc||1.78%|
|Procter & Gamble Co||1.71%|
|The Walt Disney Co||1.5%|
|Bank of America Corp||1.43%|
|Comcast Corp Class A||1.33%|
|Exxon Mobil Corp||1.2%|
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Standard Deviation of 3.03 with a R-squared of 99.96 and a Alpha of -0.08. Its Sharpe Ratio is 0.9 while AGG’s Mean Return is 0.28. Furthermore, the fund has a Treynor Ratio of 2.7 and a Beta of 1.01.
The iShares Russell 1000 Value ETF (IWD) has a R-squared of 92.38 with a Mean Return of 1.03 and a Treynor Ratio of 11.06. Its Alpha is -3.23 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a Beta of 1.02 and a Standard Deviation of 14.35.
AGG’s Mean Return is 0.75 points lower than that of IWD and its R-squared is 7.58 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IWD. The Alpha and Beta of AGG are 3.15 points higher and 0.01 points lower than IWD’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 IWD, returning 32.18% on an annual basis. The poorest year for IWD in the last ten years was 2018, with a yield of -8.4%. Most years the iShares Russell 1000 Value ETF has given investors modest returns, such as in 2014, 2017, and 2010, when gains were 13.21%, 13.47%, and 15.3% 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 IWD, the end total would have been $30,746. This equates to a $20,746 profit over 11 years and a compound annual growth rate (CAGR) of 11.40%.
AGG’s CAGR is 7.36 percentage points lower than that of IWD and as a result, would have yielded $15,378 less on a $10,000 investment. Thus, AGG performed worse than IWD by 7.36% annually.
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