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

The expense ratio of AGG is 0.03 percentage points lower than VOE’s (0.04% vs. 0.07%). AGG is mostly comprised of AAA bonds while VOE has a high exposure to the financial services sector. Overall, AGG has provided lower returns than VOE over the past ten years.

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

Summary

AGGVOE
NameiShares Core U.S. Aggregate Bond ETFVanguard Mid-Cap Value Index Fund ETF Shares
CategoryIntermediate-Term BondMid-Cap Value
IssueriSharesVanguard
AUM88.8B26.78B
Avg. Return4.04%12.52%
Div. Yield1.95%1.87%
Expense Ratio0.04%0.07%

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 Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

AGG’s dividend yield is 0.08% higher than that of VOE (1.95% vs. 1.87%). Also, AGG yielded on average 8.48% less per year over the past decade (4.04% vs. 12.52%). The expense ratio of AGG is 0.03 percentage points lower than VOE’s (0.04% vs. 0.07%).

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.

VOE - Holdings

VOE HoldingsWeight
Carrier Global Corp Ordinary Shares1.28%
International Flavors & Fragrances Inc1.13%
Motorola Solutions Inc1.12%
Discover Financial Services1.09%
Welltower Inc1.05%
Corteva Inc0.99%
Valero Energy Corp0.97%
Corning Inc0.95%
Willis Towers Watson PLC0.9%
D.R. Horton Inc0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

Risk Analysis

AGGVOE
Mean Return0.281.05
R-squared99.9688.76
Std. Deviation3.0315.98
Alpha-0.08-3.77
Beta1.011.11
Sharpe Ratio0.90.75
Treynor Ratio2.710.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Sharpe Ratio of 0.75 with a Treynor Ratio of 10.19 and a Mean Return of 1.05. Its Alpha is -3.77 while VOE’s Beta is 1.11. Furthermore, the fund has a Standard Deviation of 15.98 and a R-squared of 88.76.

AGG’s Mean Return is 0.77 points lower than that of VOE and its R-squared is 11.20 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than VOE. The Alpha and Beta of AGG are 3.69 points higher and 0.10 points lower than VOE’s Alpha and Beta.

Performance

Annual Returns

AGG vs. VOE - Annual Returns

YearAGGVOE
20207.42%2.5%
20198.68%27.98%
2018-0.05%-12.41%
20173.53%17.05%
20162.56%15.26%
20150.48%-1.8%
20146.04%13.98%
2013-2.15%37.65%
20124.04%16.04%
20117.58%-0.32%
20106.3%21.83%

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 2013 was the strongest year for VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

AGG vs. VOE - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
AGG$10,000$15,3684.04%
VOE$10,000$33,65512.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

AGG’s CAGR is 8.48 percentage points lower than that of VOE and as a result, would have yielded $18,287 less on a $10,000 investment. Thus, AGG performed worse than VOE by 8.48% annually.

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