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

The expense ratio of AGG is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%). AGG is mostly comprised of AAA bonds while IWS has a high exposure to the financial services sector. Overall, AGG has provided lower returns than IWS over the past ten years.

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

Summary

AGGIWS
NameiShares Core U.S. Aggregate Bond ETFiShares Russell Mid-Cap Value ETF
CategoryIntermediate-Term BondMid-Cap Value
IssueriSharesiShares
AUM88.8B14.24B
Avg. Return4.04%12.35%
Div. Yield1.95%1.34%
Expense Ratio0.04%0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

AGG’s dividend yield is 0.61% higher than that of IWS (1.95% vs. 1.34%). Also, AGG yielded on average 8.31% less per year over the past decade (4.04% vs. 12.35%). The expense ratio of AGG is 0.19 percentage points lower than IWS’s (0.04% vs. 0.23%).

Fund Composition

Holdings

AGG - Holdings

AGG Bond SectorsWeight
AAA68.92%
BBB15.38%
A11.16%
AA2.92%
Others1.63%
Below B0.0%
B0.0%
BB0.0%
US Government0.0%

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.

IWS - Holdings

IWS HoldingsWeight
Twitter Inc0.69%
Marvell Technology Inc0.69%
IHS Markit Ltd0.62%
Prudential Financial Inc0.56%
Otis Worldwide Corp Ordinary Shares0.54%
International Flavors & Fragrances Inc0.53%
Xcel Energy Inc0.52%
Motorola Solutions Inc0.52%
Aptiv PLC0.52%
Aflac Inc0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

AGGIWS
Mean Return0.281.06
R-squared99.9687.04
Std. Deviation3.0316.03
Alpha-0.08-4.11
Beta1.011.1
Sharpe Ratio0.90.75
Treynor Ratio2.710.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a Beta of 1.1 and a Standard Deviation of 16.03. Its Treynor Ratio is 10.3 while IWS’s R-squared is 87.04. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Mean Return of 1.06.

AGG’s Mean Return is 0.78 points lower than that of IWS and its R-squared is 12.92 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than IWS. The Alpha and Beta of AGG are 4.03 points higher and 0.09 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

AGG vs. IWS - Annual Returns

YearAGGIWS
20207.42%4.76%
20198.68%26.78%
2018-0.05%-12.36%
20173.53%13.1%
20162.56%19.69%
20150.48%-4.93%
20146.04%14.49%
2013-2.15%33.11%
20124.04%18.27%
20117.58%-1.55%
20106.3%24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

AGG vs. IWS - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
AGG$10,000$15,3684.04%
IWS$10,000$33,08312.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

AGG’s CAGR is 8.31 percentage points lower than that of IWS and as a result, would have yielded $17,715 less on a $10,000 investment. Thus, AGG performed worse than IWS by 8.31% annually.

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