The iShares Core U.S. Aggregate Bond ETF (AGG) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between AGG and SCHG? And which fund is better?
AGG and SCHG have the same expense ratio: 0.04%. AGG is mostly comprised of AAA bonds while SCHG has a high exposure to the technology sector. Overall, AGG has provided lower returns than SCHG over the past ten years.
In this article, we’ll compare AGG vs. SCHG. We’ll look at industry exposure and fund composition, as well as at their risk metrics and performance. Moreover, I’ll also discuss AGG’s and SCHG’s portfolio growth, holdings, and annual returns and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||Schwab U.S. Large-Cap 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 Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
AGG’s dividend yield is 1.52% higher than that of SCHG (1.95% vs. 0.43%). Also, AGG yielded on average 13.77% less per year over the past decade (4.04% vs. 17.81%). AGG and SCHG have the same expense ratio: 0.04%.
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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 A||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a R-squared of 99.96 with a Mean Return of 0.28 and a Alpha of -0.08. Its Sharpe Ratio is 0.9 while AGG’s Beta is 1.01. Furthermore, the fund has a Treynor Ratio of 2.7 and a Standard Deviation of 3.03.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Standard Deviation of 14.78 with a Beta of 1.05 and a Treynor Ratio of 16.3. Its R-squared is 92.92 while SCHG’s Alpha is 1.97. Furthermore, the fund has a Mean Return of 1.46 and a Sharpe Ratio of 1.14.
AGG’s Mean Return is 1.18 points lower than that of SCHG and its R-squared is 7.04 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than SCHG. The Alpha and Beta of AGG are 2.05 points lower and 0.04 points lower than SCHG’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 SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in AGG would have resulted in a final balance of $14,457. This is a profit of $4,457 over 10 years and amounts to a compound annual growth rate (CAGR) of 4.04%.
With a $10,000 investment in SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
AGG’s CAGR is 13.77 percentage points lower than that of SCHG and as a result, would have yielded $33,099 less on a $10,000 investment. Thus, AGG performed worse than SCHG by 13.77% annually.
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