AGG vs. IXUS: What’s The Difference?

The iShares Core U.S. Aggregate Bond ETF (AGG) and the iShares Core MSCI Total International Stock ETF (IXUS) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and IXUS is a iShares Foreign Large Blend fund. So, what’s the difference between AGG and IXUS? And which fund is better?

The expense ratio of AGG is 0.05 percentage points lower than IXUS’s (0.04% vs. 0.09%). AGG is mostly comprised of AAA bonds while IXUS has a high exposure to the financial services sector. Overall, AGG has provided lower returns than IXUS over the past ten years.

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

Summary

AGG IXUS
Name iShares Core U.S. Aggregate Bond ETF iShares Core MSCI Total International Stock ETF
Category Intermediate-Term Bond Foreign Large Blend
Issuer iShares iShares
AUM 88.8B 29.54B
Avg. Return 4.04% 6.09%
Div. Yield 1.95% 2.13%
Expense Ratio 0.04% 0.09%

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 Core MSCI Total International Stock ETF (IXUS) is a Foreign Large Blend fund that is issued by iShares. It currently has 29.54B total assets under management and has yielded an average annual return of 6.09% over the past 10 years. The fund has a dividend yield of 2.13% with an expense ratio of 0.09%.

AGG’s dividend yield is 0.18% lower than that of IXUS (1.95% vs. 2.13%). Also, AGG yielded on average 2.05% less per year over the past decade (4.04% vs. 6.09%). The expense ratio of AGG is 0.05 percentage points lower than IXUS’s (0.04% vs. 0.09%).

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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.

IXUS - Holdings

IXUS Holdings Weight
Taiwan Semiconductor Manufacturing Co Ltd 1.64%
Tencent Holdings Ltd 1.35%
Alibaba Group Holding Ltd Ordinary Shares 1.34%
Nestle SA 1.1%
Samsung Electronics Co Ltd 1.06%
ASML Holding NV 0.9%
Roche Holding AG 0.81%
LVMH Moet Hennessy Louis Vuitton SE 0.67%
Novartis AG 0.62%
Toyota Motor Corp 0.59%

IXUS’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, and Samsung Electronics Co Ltd at 1.64%, 1.35%, 1.34%, 1.1%, and 1.06%.

ASML Holding NV (0.9%), Roche Holding AG (0.81%), and LVMH Moet Hennessy Louis Vuitton SE (0.67%) have a slightly smaller but still significant weight. Novartis AG and Toyota Motor Corp are also represented in the IXUS’s holdings at 0.62% and 0.59%.

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Risk Analysis

AGG IXUS
Mean Return 0.28 0
R-squared 99.96 0
Std. Deviation 3.03 0
Alpha -0.08 0
Beta 1.01 0
Sharpe Ratio 0.9 0
Treynor Ratio 2.7 0

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

The iShares Core MSCI Total International Stock ETF (IXUS) has a Mean Return of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Treynor Ratio is 0 while IXUS’s Beta is 0. Furthermore, the fund has a Alpha of 0 and a Sharpe Ratio of 0.

AGG’s Mean Return is 0.28 points higher than that of IXUS and its R-squared is 99.96 points higher. With a Standard Deviation of 3.03, AGG is slightly more volatile than IXUS. The Alpha and Beta of AGG are 0.08 points lower and 1.01 points higher than IXUS’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. IXUS - Annual Returns

Year AGG IXUS
2020 7.42% 11.14%
2019 8.68% 21.85%
2018 -0.05% -14.55%
2017 3.53% 28.08%
2016 2.56% 4.66%
2015 0.48% -4.62%
2014 6.04% -3.96%
2013 -2.15% 15.85%
2012 4.04% 0.0%
2011 7.58% 0.0%
2010 6.3% 0.0%

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 2017 was the strongest year for IXUS, returning 28.08% on an annual basis. The poorest year for IXUS in the last ten years was 2018, with a yield of -14.55%. Most years the iShares Core MSCI Total International Stock ETF has given investors modest returns, such as in 2011, 2010, and 2016, when gains were 0.0%, 0.0%, and 4.66% respectively.

Portfolio Growth

AGG vs. IXUS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $13,201 4.04%
IXUS $10,000 $14,209 6.09%

A $10,000 investment in AGG would have resulted in a final balance of $13,201. This is a profit of $3,201 over 7 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

With a $10,000 investment in IXUS, the end total would have been $14,209. This equates to a $4,209 profit over 7 years and a compound annual growth rate (CAGR) of 6.09%.

AGG’s CAGR is 2.05 percentage points lower than that of IXUS and as a result, would have yielded $1,008 less on a $10,000 investment. Thus, AGG performed worse than IXUS by 2.05% annually.


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