Skip to content

AGG vs. SCHG: What’s The Difference?

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.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

AGGSCHG
NameiShares Core U.S. Aggregate Bond ETFSchwab U.S. Large-Cap Growth ETF
CategoryIntermediate-Term BondLarge Growth
IssueriSharesSchwab ETFs
AUM88.8B15.16B
Avg. Return4.04%17.81%
Div. Yield1.95%0.43%
Expense Ratio0.04%0.04%

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%.

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

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.

SCHG - Holdings

SCHG HoldingsWeight
Apple Inc11.49%
Microsoft Corp10.91%
Amazon.com Inc7.89%
Facebook Inc A4.45%
Alphabet Inc A3.93%
Alphabet Inc Class C3.82%
Tesla Inc2.8%
NVIDIA Corp2.67%
Visa Inc Class A2.12%
UnitedHealth Group Inc2.02%

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%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

AGGSCHG
Mean Return0.281.46
R-squared99.9692.92
Std. Deviation3.0314.78
Alpha-0.081.97
Beta1.011.05
Sharpe Ratio0.91.14
Treynor Ratio2.716.3

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.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

AGG vs. SCHG - Annual Returns

YearAGGSCHG
20207.42%39.13%
20198.68%36.21%
2018-0.05%-1.35%
20173.53%28.04%
20162.56%6.76%
20150.48%3.26%
20146.04%15.74%
2013-2.15%33.96%
20124.04%17.02%
20117.58%-0.67%
20106.3%16.83%

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.

Portfolio Growth

AGG vs. SCHG - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
AGG$10,000$14,4574.04%
SCHG$10,000$47,55617.81%

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.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.