AGG vs. VV: What’s The Difference?

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

AGG and VV have the same expense ratio: 0.04%. AGG is mostly comprised of AAA bonds while VV has a high exposure to the technology sector. Overall, AGG has provided lower returns than VV over the past ten years.

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

Summary

AGG VV
Name iShares Core U.S. Aggregate Bond ETF Vanguard Large-Cap Index Fund ETF Shares
Category Intermediate-Term Bond Large Blend
Issuer iShares Vanguard
AUM 88.8B 37.65B
Avg. Return 4.04% 14.75%
Div. Yield 1.95% 1.26%
Expense Ratio 0.04% 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 Vanguard Large-Cap Index Fund ETF Shares (VV) is a Large Blend fund that is issued by Vanguard. It currently has 37.65B total assets under management and has yielded an average annual return of 14.75% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.04%.

AGG’s dividend yield is 0.69% higher than that of VV (1.95% vs. 1.26%). Also, AGG yielded on average 10.71% less per year over the past decade (4.04% vs. 14.75%). AGG and VV have the same expense ratio: 0.04%.

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Fund Composition

Holdings

AGG - Holdings

AGG Bond Sectors Weight
AAA 68.92%
BBB 15.38%
A 11.16%
AA 2.92%
Others 1.63%
Below B 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

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.

VV - Holdings

VV Holdings Weight
Apple Inc 5.7%
Microsoft Corp 5.35%
Amazon.com Inc 3.87%
Facebook Inc Class A 2.19%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.81%
Tesla Inc 1.37%
Berkshire Hathaway Inc Class B 1.3%
NVIDIA Corp 1.24%
JPMorgan Chase & Co 1.24%

VV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.7%, 5.35%, 3.87%, 2.19%, and 1.93%.

Alphabet Inc Class C (1.81%), Tesla Inc (1.37%), and Berkshire Hathaway Inc Class B (1.3%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VV’s holdings at 1.24% and 1.24%.

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Risk Analysis

AGG VV
Mean Return 0.28 1.24
R-squared 99.96 99.86
Std. Deviation 3.03 13.75
Alpha -0.08 -0.08
Beta 1.01 1.01
Sharpe Ratio 0.9 1.04
Treynor Ratio 2.7 14.14

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

The Vanguard Large-Cap Index Fund ETF Shares (VV) has a Beta of 1.01 with a Alpha of -0.08 and a Sharpe Ratio of 1.04. Its Mean Return is 1.24 while VV’s Treynor Ratio is 14.14. Furthermore, the fund has a R-squared of 99.86 and a Standard Deviation of 13.75.

AGG’s Mean Return is 0.96 points lower than that of VV and its R-squared is 0.10 points higher. With a Standard Deviation of 3.03, AGG is slightly less volatile than VV. The Alpha and Beta of AGG are 0.00 points lower and 0.00 points lower than VV’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. VV - Annual Returns

Year AGG VV
2020 7.42% 20.99%
2019 8.68% 31.39%
2018 -0.05% -4.44%
2017 3.53% 22.03%
2016 2.56% 11.65%
2015 0.48% 1.07%
2014 6.04% 13.39%
2013 -2.15% 32.65%
2012 4.04% 16.09%
2011 7.58% 1.58%
2010 6.3% 15.81%

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 VV, returning 32.65% on an annual basis. The poorest year for VV in the last ten years was 2018, with a yield of -4.44%. Most years the Vanguard Large-Cap Index Fund ETF Shares has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.39%, 15.81%, and 16.09% respectively.

Portfolio Growth

AGG vs. VV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $15,368 4.04%
VV $10,000 $42,970 14.75%

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 VV, the end total would have been $42,970. This equates to a $32,970 profit over 11 years and a compound annual growth rate (CAGR) of 14.75%.

AGG’s CAGR is 10.71 percentage points lower than that of VV and as a result, would have yielded $27,602 less on a $10,000 investment. Thus, AGG performed worse than VV by 10.71% annually.


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