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AGG vs. SDY: What’s The Difference?

The iShares Core U.S. Aggregate Bond ETF (AGG) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between AGG and SDY? And which fund is better?

The expense ratio of AGG is 0.31 percentage points lower than SDY’s (0.04% vs. 0.35%). AGG is mostly comprised of AAA bonds while SDY has a high exposure to the financial services sector. Overall, AGG has provided lower returns than SDY over the past ten years.

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

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Summary

AGGSDY
NameiShares Core U.S. Aggregate Bond ETFSPDR S&P Dividend ETF
CategoryIntermediate-Term BondLarge Value
IssueriSharesSPDR State Street Global Advisors
AUM88.8B19.67B
Avg. Return4.04%12.44%
Div. Yield1.95%2.65%
Expense Ratio0.04%0.35%

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 SPDR S&P Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

AGG’s dividend yield is 0.70% lower than that of SDY (1.95% vs. 2.65%). Also, AGG yielded on average 8.40% less per year over the past decade (4.04% vs. 12.44%). The expense ratio of AGG is 0.31 percentage points lower than SDY’s (0.04% vs. 0.35%).

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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.

SDY - Holdings

SDY HoldingsWeight
Exxon Mobil Corp2.81%
AT&T Inc2.5%
South Jersey Industries Inc2.22%
Chevron Corp2.02%
International Business Machines Corp2.0%
AbbVie Inc1.93%
National Retail Properties Inc1.86%
Federal Realty Investment Trust1.77%
Realty Income Corp1.7%
Old Republic International Corp1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

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Risk Analysis

AGGSDY
Mean Return0.281.07
R-squared99.9683.62
Std. Deviation3.0312.9
Alpha-0.08-0.1
Beta1.010.87
Sharpe Ratio0.90.95
Treynor Ratio2.713.94

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

The SPDR S&P Dividend ETF (SDY) has a Standard Deviation of 12.9 with a Treynor Ratio of 13.94 and a Mean Return of 1.07. Its Alpha is -0.1 while SDY’s R-squared is 83.62. Furthermore, the fund has a Beta of 0.87 and a Sharpe Ratio of 0.95.

AGG’s Mean Return is 0.79 points lower than that of SDY and its R-squared is 16.34 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than SDY. The Alpha and Beta of AGG are 0.02 points higher and 0.14 points higher than SDY’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. SDY - Annual Returns

YearAGGSDY
20207.42%1.78%
20198.68%23.37%
2018-0.05%-2.73%
20173.53%15.84%
20162.56%20.17%
20150.48%-0.7%
20146.04%13.8%
2013-2.15%30.09%
20124.04%11.51%
20117.58%7.28%
20106.3%16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

AGG vs. SDY - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
AGG$10,000$15,3684.04%
SDY$10,000$34,80612.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

AGG’s CAGR is 8.40 percentage points lower than that of SDY and as a result, would have yielded $19,438 less on a $10,000 investment. Thus, AGG performed worse than SDY by 8.40% annually.


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