The Vanguard S&P 500 ETF (VOO) and the iShares Core U.S. Aggregate Bond ETF (AGG) are both among the Top 100 ETFs. VOO is a Vanguard Large Blend fund and AGG is a iShares Intermediate-Term Bond fund. So, what’s the difference between VOO and AGG? And which fund is better?
The expense ratio of VOO is 0.01 percentage points lower than AGG’s (0.03% vs. 0.04%). VOO also has a high exposure to the technology sector while AGG is mostly comprised of AAA bonds. Overall, VOO has provided higher returns than AGG over the past ten years.
In this article, we’ll compare VOO vs. AGG. We’ll look at risk metrics and performance, as well as at their holdings and annual returns. Moreover, I’ll also discuss VOO’s and AGG’s portfolio growth, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard S&P 500 ETF||iShares Core U.S. Aggregate Bond ETF|
|Category||Large Blend||Intermediate-Term Bond|
The Vanguard S&P 500 ETF (VOO) is a Large Blend fund that is issued by Vanguard. It currently has 753.41B total assets under management and has yielded an average annual return of 14.45% over the past 10 years. The fund has a dividend yield of 1.34% 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%.
VOO’s dividend yield is 0.61% lower than that of AGG (1.34% vs. 1.95%). Also, VOO yielded on average 10.41% more per year over the past decade (14.45% vs. 4.04%). The expense ratio of VOO 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||2.02%|
|Alphabet Inc Class C||1.97%|
|Berkshire Hathaway Inc Class B||1.44%|
|JPMorgan Chase & Co||1.3%|
VOO’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.92%, 5.62%, 4.06%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.97%), Tesla Inc (1.44%), and Berkshire Hathaway Inc Class B (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VOO’s holdings at 1.37% and 1.3%.
|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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VOO had its best year in 2013 with an annual return of 32.33%. VOO’s worst year over the past decade yielded -4.42% and occurred in 2018. In most years the Vanguard S&P 500 ETF provided moderate returns such as in 2016, 2014, and 2012 where annual returns amounted to 11.93%, 13.63%, and 15.98% 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 VOO would have resulted in a final balance of $36,575. This is a profit of $26,575 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.45%.
With a $10,000 investment in AGG, the end total would have been $14,457. This equates to a $4,457 profit over 10 years and a compound annual growth rate (CAGR) of 4.04%.
VOO’s CAGR is 10.41 percentage points higher than that of AGG and as a result, would have yielded $22,118 more on a $10,000 investment. Thus, VOO outperformed AGG by 10.41% annually.
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