The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares Core U.S. Aggregate Bond ETF (AGG) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and AGG is a iShares Intermediate-Term Bond fund. So, what’s the difference between VTI and AGG? And which fund is better?
The expense ratio of VTI is 0.01 percentage points lower than AGG’s (0.03% vs. 0.04%). VTI also has a high exposure to the technology sector while AGG is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than AGG over the past ten years.
In this article, we’ll compare VTI vs. AGG. We’ll look at annual returns and fund composition, as well as at their holdings and performance. Moreover, I’ll also discuss VTI’s and AGG’s portfolio growth, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| VTI | AGG | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | iShares Core U.S. Aggregate Bond ETF |
| Category | Large Blend | Intermediate-Term Bond |
| Issuer | Vanguard | iShares |
| AUM | 1.26T | 88.8B |
| Avg. Return | 14.70% | 4.04% |
| Div. Yield | 1.26% | 1.95% |
| Expense Ratio | 0.03% | 0.04% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% 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%.
VTI’s dividend yield is 0.69% lower than that of AGG (1.26% vs. 1.95%). Also, VTI yielded on average 10.66% more per year over the past decade (14.70% vs. 4.04%). The expense ratio of VTI is 0.01 percentage points lower than AGG’s (0.03% vs. 0.04%).
Fund Composition
Holdings
| VTI Holdings | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| JPMorgan Chase & Co | 1.06% |
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
| 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.
Performance
Annual Returns
| Year | VTI | AGG |
| 2020 | 20.95% | 7.42% |
| 2019 | 30.8% | 8.68% |
| 2018 | -5.13% | -0.05% |
| 2017 | 21.16% | 3.53% |
| 2016 | 12.68% | 2.56% |
| 2015 | 0.4% | 0.48% |
| 2014 | 12.56% | 6.04% |
| 2013 | 33.51% | -2.15% |
| 2012 | 16.41% | 4.04% |
| 2011 | 1.06% | 7.58% |
| 2010 | 17.26% | 6.3% |
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VTI | $10,000 | $42,648 | 14.70% |
| AGG | $10,000 | $15,368 | 4.04% |
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
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%.
VTI’s CAGR is 10.66 percentage points higher than that of AGG and as a result, would have yielded $27,280 more on a $10,000 investment. Thus, VTI outperformed AGG by 10.66% annually.
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