The iShares Core S&P 500 ETF (IVV) and the iShares Core U.S. Aggregate Bond ETF (AGG) are both among the Top 100 ETFs. IVV is a iShares Large Blend fund and AGG is a iShares Intermediate-Term Bond fund. So, what’s the difference between IVV and AGG? And which fund is better?
The expense ratio of IVV is 0.01 percentage points lower than AGG’s (0.03% vs. 0.04%). IVV also has a high exposure to the technology sector while AGG is mostly comprised of AAA bonds. Overall, IVV has provided higher returns than AGG over the past ten years.
In this article, we’ll compare IVV vs. AGG. We’ll look at portfolio growth and holdings, as well as at their industry exposure and risk metrics. Moreover, I’ll also discuss IVV’s and AGG’s fund composition, annual returns, and performance and examine how these affect their overall returns.
|Name||iShares Core S&P 500 ETF||iShares Core U.S. Aggregate Bond ETF|
|Category||Large Blend||Intermediate-Term Bond|
The iShares Core S&P 500 ETF (IVV) is a Large Blend fund that is issued by iShares. It currently has 294.95B total assets under management and has yielded an average annual return of 14.48% over the past 10 years. The fund has a dividend yield of 1.28% with an expense ratio of 0.03%.
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%.
IVV’s dividend yield is 0.67% lower than that of AGG (1.28% vs. 1.95%). Also, IVV yielded on average 10.44% more per year over the past decade (14.48% vs. 4.04%). The expense ratio of IVV is 0.01 percentage points lower than AGG’s (0.03% vs. 0.04%).
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|Facebook Inc Class A||2.29%|
|Alphabet Inc Class A||2.17%|
|Alphabet Inc Class C||2.07%|
|Berkshire Hathaway Inc Class B||1.42%|
|JPMorgan Chase & Co||1.23%|
IVV’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 6.14%, 5.76%, 3.83%, 2.29%, and 2.17%.
Alphabet Inc Class C (2.07%), Tesla Inc (1.42%), and Berkshire Hathaway Inc Class B (1.42%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IVV’s holdings at 1.3% and 1.23%.
|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.
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IVV had its best year in 2013 with an annual return of 32.31%. IVV’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the iShares Core S&P 500 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.62%, 14.96%, and 15.91% respectively.
The year 2019 was the strongest year for AGG, returning 8.68% on an annual basis. The poorest year for AGG in the last ten years was 2013, with a yield of -2.15%. Most years the iShares Core U.S. Aggregate Bond ETF has given investors modest returns, such as in 2017, 2012, and 2014, when gains were 3.53%, 4.04%, and 6.04% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IVV would have resulted in a final balance of $41,976. This is a profit of $31,976 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.48%.
With a $10,000 investment in AGG, the end total would have been $15,368. This equates to a $5,368 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.
IVV’s CAGR is 10.44 percentage points higher than that of AGG and as a result, would have yielded $26,608 more on a $10,000 investment. Thus, IVV outperformed AGG by 10.44% annually.
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