The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Russell 1000 Growth ETF (IWF) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IWF is a iShares Large Growth fund. So, what’s the difference between AGG and IWF? And which fund is better?
The expense ratio of AGG is 0.15 percentage points lower than IWF’s (0.04% vs. 0.19%). AGG is mostly comprised of AAA bonds while IWF has a high exposure to the technology sector. Overall, AGG has provided lower returns than IWF over the past ten years.
In this article, we’ll compare AGG vs. IWF. We’ll look at fund composition and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss AGG’s and IWF’s annual returns, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||iShares Russell 1000 Growth ETF|
|Category||Intermediate-Term Bond||Large Growth|
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 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% with an expense ratio of 0.19%.
AGG’s dividend yield is 1.43% higher than that of IWF (1.95% vs. 0.52%). Also, AGG yielded on average 13.69% less per year over the past decade (4.04% vs. 17.72%). The expense ratio of AGG is 0.15 percentage points lower than IWF’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.
|Facebook Inc Class A||3.91%|
|Alphabet Inc Class A||3.2%|
|Alphabet Inc Class C||3.03%|
|Visa Inc Class A||1.91%|
|The Home Depot Inc||1.62%|
IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.
Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Sharpe Ratio of 0.9 with a Alpha of -0.08 and a Beta of 1.01. Its Treynor Ratio is 2.7 while AGG’s Standard Deviation is 3.03. Furthermore, the fund has a R-squared of 99.96 and a Mean Return of 0.28.
The iShares Russell 1000 Growth ETF (IWF) has a R-squared of 92.93 with a Sharpe Ratio of 1.19 and a Beta of 1.03. Its Alpha is 2.16 while IWF’s Mean Return is 1.48. Furthermore, the fund has a Treynor Ratio of 17.1 and a Standard Deviation of 14.42.
AGG’s Mean Return is 1.20 points lower than that of IWF and its R-squared is 7.03 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IWF. The Alpha and Beta of AGG are 2.24 points lower and 0.02 points lower than IWF’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 2020 was the strongest year for IWF, returning 38.21% on an annual basis. The poorest year for IWF in the last ten years was 2018, with a yield of -1.68%. Most years the iShares Russell 1000 Growth ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 12.84%, 15.03%, and 16.47% 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 IWF, the end total would have been $55,920. This equates to a $45,920 profit over 11 years and a compound annual growth rate (CAGR) of 17.72%.
AGG’s CAGR is 13.69 percentage points lower than that of IWF and as a result, would have yielded $40,552 less on a $10,000 investment. Thus, AGG performed worse than IWF by 13.69% annually.
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