AGG vs. IWR: What’s The Difference?

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

The expense ratio of AGG is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%). AGG is mostly comprised of AAA bonds while IWR has a high exposure to the technology sector. Overall, AGG has provided lower returns than IWR over the past ten years.

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

Summary

AGG IWR
Name iShares Core U.S. Aggregate Bond ETF iShares Russell Mid-Cap ETF
Category Intermediate-Term Bond Mid-Cap Blend
Issuer iShares iShares
AUM 88.8B 29.84B
Avg. Return 4.04% 14.15%
Div. Yield 1.95% 0.99%
Expense Ratio 0.04% 0.19%

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 ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

AGG’s dividend yield is 0.96% higher than that of IWR (1.95% vs. 0.99%). Also, AGG yielded on average 10.11% less per year over the past decade (4.04% vs. 14.15%). The expense ratio of AGG is 0.15 percentage points lower than IWR’s (0.04% vs. 0.19%).

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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.

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

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Risk Analysis

AGG IWR
Mean Return 0.28 1.17
R-squared 99.96 91.52
Std. Deviation 3.03 15.66
Alpha -0.08 -2.8
Beta 1.01 1.11
Sharpe Ratio 0.9 0.86
Treynor Ratio 2.7 11.72

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

The iShares Russell Mid-Cap ETF (IWR) has a Mean Return of 1.17 with a Sharpe Ratio of 0.86 and a Standard Deviation of 15.66. Its R-squared is 91.52 while IWR’s Treynor Ratio is 11.72. Furthermore, the fund has a Beta of 1.11 and a Alpha of -2.8.

AGG’s Mean Return is 0.89 points lower than that of IWR and its R-squared is 8.44 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IWR. The Alpha and Beta of AGG are 2.72 points higher and 0.10 points lower than IWR’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. IWR - Annual Returns

Year AGG IWR
2020 7.42% 16.91%
2019 8.68% 30.31%
2018 -0.05% -9.13%
2017 3.53% 18.32%
2016 2.56% 13.58%
2015 0.48% -2.57%
2014 6.04% 13.03%
2013 -2.15% 34.5%
2012 4.04% 17.13%
2011 7.58% -1.67%
2010 6.3% 25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

AGG vs. IWR - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $15,368 4.04%
IWR $10,000 $39,751 14.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

AGG’s CAGR is 10.11 percentage points lower than that of IWR and as a result, would have yielded $24,383 less on a $10,000 investment. Thus, AGG performed worse than IWR by 10.11% annually.


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