AGG vs. IWP: What’s The Difference?

The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Russell Mid-Cap Growth ETF (IWP) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IWP is a iShares Mid-Cap Growth fund. So, what’s the difference between AGG and IWP? And which fund is better?

The expense ratio of AGG is 0.20 percentage points lower than IWP’s (0.04% vs. 0.24%). AGG is mostly comprised of AAA bonds while IWP has a high exposure to the technology sector. Overall, AGG has provided lower returns than IWP over the past ten years.

In this article, we’ll compare AGG vs. IWP. We’ll look at annual returns and holdings, as well as at their industry exposure and performance. Moreover, I’ll also discuss AGG’s and IWP’s risk metrics, portfolio growth, and fund composition and examine how these affect their overall returns.

Summary

AGG IWP
Name iShares Core U.S. Aggregate Bond ETF iShares Russell Mid-Cap Growth ETF
Category Intermediate-Term Bond Mid-Cap Growth
Issuer iShares iShares
AUM 88.8B 15.7B
Avg. Return 4.04% 16.75%
Div. Yield 1.95% 0.26%
Expense Ratio 0.04% 0.24%

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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

AGG’s dividend yield is 1.69% higher than that of IWP (1.95% vs. 0.26%). Also, AGG yielded on average 12.71% less per year over the past decade (4.04% vs. 16.75%). The expense ratio of AGG is 0.20 percentage points lower than IWP’s (0.04% vs. 0.24%).

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Fund Composition

Holdings

AGG - Holdings

AGG Bond Sectors Weight
AAA 68.92%
BBB 15.38%
A 11.16%
AA 2.92%
Others 1.63%
Below B 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

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.

IWP - Holdings

IWP Holdings Weight
IDEXX Laboratories Inc 1.3%
DocuSign Inc 1.3%
Roku Inc Class A 1.29%
Match Group Inc 1.06%
Chipotle Mexican Grill Inc 1.06%
Pinterest Inc 1.05%
Veeva Systems Inc Class A 1.04%
Palantir Technologies Inc Ordinary Shares – Class A 1.04%
Lululemon Athletica Inc 1.01%
DexCom Inc 1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

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Risk Analysis

AGG IWP
Mean Return 0.28 1.27
R-squared 99.96 87.01
Std. Deviation 3.03 16.05
Alpha -0.08 -1.03
Beta 1.01 1.1
Sharpe Ratio 0.9 0.91
Treynor Ratio 2.7 12.98

The iShares Core U.S. Aggregate Bond ETF (AGG) has a Alpha of -0.08 with a Beta of 1.01 and a Sharpe Ratio of 0.9. Its Treynor Ratio is 2.7 while AGG’s Mean Return is 0.28. Furthermore, the fund has a R-squared of 99.96 and a Standard Deviation of 3.03.

The iShares Russell Mid-Cap Growth ETF (IWP) has a Mean Return of 1.27 with a Treynor Ratio of 12.98 and a Sharpe Ratio of 0.91. Its Alpha is -1.03 while IWP’s R-squared is 87.01. Furthermore, the fund has a Beta of 1.1 and a Standard Deviation of 16.05.

AGG’s Mean Return is 0.99 points lower than that of IWP and its R-squared is 12.95 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IWP. The Alpha and Beta of AGG are 0.95 points higher and 0.09 points lower than IWP’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. IWP - Annual Returns

Year AGG IWP
2020 7.42% 35.29%
2019 8.68% 35.14%
2018 -0.05% -4.95%
2017 3.53% 24.98%
2016 2.56% 7.15%
2015 0.48% -0.39%
2014 6.04% 11.68%
2013 -2.15% 35.44%
2012 4.04% 15.62%
2011 7.58% -1.82%
2010 6.3% 26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

AGG vs. IWP - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $15,368 4.04%
IWP $10,000 $50,191 16.75%

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 IWP, the end total would have been $50,191. This equates to a $40,191 profit over 11 years and a compound annual growth rate (CAGR) of 16.75%.

AGG’s CAGR is 12.71 percentage points lower than that of IWP and as a result, would have yielded $34,823 less on a $10,000 investment. Thus, AGG performed worse than IWP by 12.71% annually.


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