The iShares Core U.S. Aggregate Bond ETF (AGG) and the Vanguard Value Index Fund ETF Shares (VTV) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and VTV is a Vanguard Large Value fund. So, what’s the difference between AGG and VTV? And which fund is better?
AGG and VTV have the same expense ratio: 0.04%. AGG is mostly comprised of AAA bonds while VTV has a high exposure to the financial services sector. Overall, AGG has provided lower returns than VTV over the past ten years.
In this article, we’ll compare AGG vs. VTV. We’ll look at annual returns and risk metrics, as well as at their fund composition and holdings. Moreover, I’ll also discuss AGG’s and VTV’s performance, industry exposure, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core U.S. Aggregate Bond ETF||Vanguard Value Index Fund ETF Shares|
|Category||Intermediate-Term Bond||Large Value|
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 Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% with an expense ratio of 0.04%.
AGG’s dividend yield is 0.20% lower than that of VTV (1.95% vs. 2.15%). Also, AGG yielded on average 8.04% less per year over the past decade (4.04% vs. 12.07%). AGG and VTV 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.
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
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The iShares Core U.S. Aggregate Bond ETF (AGG) has a Alpha of -0.08 with a Treynor Ratio of 2.7 and a Sharpe Ratio of 0.9. Its Beta is 1.01 while AGG’s Mean Return is 0.28. Furthermore, the fund has a R-squared of 99.96 and a Standard Deviation of 3.03.
The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Treynor Ratio of 11.94 and a Standard Deviation of 13.78. Its Alpha is -1.92 while VTV’s Beta is 0.98. Furthermore, the fund has a R-squared of 92.61 and a Sharpe Ratio of 0.87.
AGG’s Mean Return is 0.77 points lower than that of VTV and its R-squared is 7.35 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than VTV. The Alpha and Beta of AGG are 1.84 points higher and 0.03 points higher than VTV’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 2013 was the strongest year for VTV, returning 33.03% on an annual basis. The poorest year for VTV in the last ten years was 2018, with a yield of -5.39%. Most years the Vanguard Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.19%, 14.45%, and 15.19% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
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 VTV, the end total would have been $33,163. This equates to a $23,163 profit over 11 years and a compound annual growth rate (CAGR) of 12.07%.
AGG’s CAGR is 8.04 percentage points lower than that of VTV and as a result, would have yielded $17,795 less on a $10,000 investment. Thus, AGG performed worse than VTV by 8.04% annually.
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