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BND vs AGG: Which Bond Fund Should You Choose?

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We Compare BND vs AGG:

We are going to explore the difference between Vanguard Total Bond Market ETF (BND) vs iShares Core U.S. Aggregate Bond ETF (AGG)

Choosing between two funds can be difficult, but I will make it easy to decide between BND vs AGG.

BND vs AGG Comparison Graphic

 

BND vs AGG

The main difference between BND and AGG is the company that offers the ETF. Blackrock offers AGG, while Vanguard offers BND.

Another significant difference is the number of holdings in each ETF. For example, BND has 9,524 different holdings in the index compared to 10,341 with AGG.

Blackrock offers AGG

Vanguard offers BND

BND and AGG have the same expense ratio of 0.03%, making them low-cost ETFs.

AGG

  • Fund Inception: 2009
  • Offered By Blackrock
  • Tracks The Total U.S Investment Grade Bond Market
  • Expense Ratio 0.03%
  • Number Of Stocks: 10,341

BND

  • Fund Inception: 2007
  • Offered By Vanguard
  • Tracks the Broad Market Weighted Bond Index
  • Expense Ratio 0.03%
  • Number Of Stocks: 9,524
  • Equivalent Admiral Fund (VBTLX)
  • Dividend Yield: 2.52%

 

BND vs AGG Performance

Vanguard’s BND and Blackrock’s AGG have had almost identical performance returns over the last 10 years, with AGG beating BND by 0.01%.

Here is how their performance compares:

BND vs AGG Performance

Here is another comparison of short-term performance:

BND vs AGG Performance Chart

Again, as you can see, they have performed the same over the short and long term.

Similar performance returns occur because BND and AGG have many overlapping holdings.

 

BND vs AGG Holdings

There is a significant difference in the number of holdings for BND and AGG. BND holds 9,524 bonds in the ETF, while AGG holds 10,341 bonds.

AGG holds more bonds compared to BND.

Here are BND and AGG holdings side-by-side:

BND vs AGG Holdings

BND and AGG’s top 10 holdings are similar except for the percent weight of each company. For example, the top 10 holdings for BND make up 16% of its portfolio compared to 9% with AGG.

 

BND and AGG Differences

The main difference between BND and AGG is the company that offers the fund. AGG is provided by Blackrock, while Vanguard provides BND.

They also differ in the number of holdings. BND holds 9,524 bonds, while AGG holds 10,341 bonds, making it larger than BND.

BND provides more liquidity with $83 billion in net assets compared to $82 billion with AGG.

BND vs AGG Comparison Chart

By investing in an ETF with more holdings, you are helping diversify your portfolio and minimize risk.

Differences between BND and AGG:

  • Brokerage (BND is Vanguard, AGG is Blackrock)
  • Different Number Of Holdings (9,524 vs 10,341)
  • Liquidity
  • Tracking Index

 

BND Description

  • Fund Inception: 2007
  • Offered By Vanguard
  • Tracks the Broad Market Weighted Bond Index
  • Expense Ratio 0.03%
  • Number Of Stocks: 9,524

The Vanguard Total Bond Market ETF (BND) launched in 2007 and tracks the Broad Market Weighted Bond Index.

BND is passively managed to give investors broad exposure to 9,524 bond holdings. As a result, BND has one of the broadest baskets of bonds.

It has over $83 billion, making it one of the largest ETFs to track the Broad Market Weighted Bond Index.

Large, mid, and small-cap companies provide more diversification. More diversification translates into less risk for investors.

 

BND Performance

Vanguard’s BND seeks to replicate the performance of the Broad Market Weighted Bond Index.

It has resulted in steady performance returns over the last 10 years:

BND Performance Chart

In addition, the ETF gives access to over 9,000 bond holdings. It also provides diversification into all market capitalizations but focuses on government holdings.

BND Performance

As you can see, BND has only returned 1.44% over the last 10 years.

Vanguard Total Bond Market ETF (BND) may be a good option for investors looking to diversify from stocks and lower their portfolio volatility by adding bonds.

The benefits of this ETF include expense ratio and risk management.

 

BND Costs

Cost is one of the many vital factors to consider in choosing an ETF. To analyze the cost of an ETF, you should look at the expense ratio.

Cheaper funds tend to yield higher profits since they spend less on management.

BND is one of the cheapest exchange-traded funds, with an expense ratio of 0.03%.

In other words, for a $10,000 investment, the ETF charges you $3 for annual operating expenses.

 

BND Holdings

The top 10 holdings for BND make up 16% of its total assets.

BND Holdings

Vanguard’s BND holds Agency Bond, FNMA 30 Yr, GNMA II 30 Yr, U.S Treasury Notes, and over 9,000 other bond holdings.

If you are looking for a Vanguard fund like BND, you can look at the Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX).

 

No Minimum Investment

BND and AGG are exchange-traded funds (ETFs), so there is no minimum investment. Investors looking to buy fractional shares can use platforms like M1 Finance.

Usually, fractional shares are not available for ETFs, but with M1 Finance, you can purchase fractional shares with no commission.

Buying fractional shares allows you to maximize your investment. This is great for shares of BND due to its high price per share.

There are two easy ways to invest in BND or AGG commission-free.

  1. Vanguard to invest in BND or Blackrock for AGG
  2. M1 Finance to invest in either BND or AGG. (Use this link for $50 when you open a new account)

Both of these options are free. This is important because fees can lower our returns.

I like M1 Finance as the best option because it gives you the flexibility to purchase BND, AGG, and thousands of other ETFs.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital Retirement Fee Analyzer

Personal Capital’s free tools allow you to quickly find which of your investments has high fees so you can switch them to low-cost options. (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

AGG Description

  • Fund Inception: 2003
  • Expense Ratio: 0.03%
  • Number Of Stocks: 10,341
  • Top 10 Holdings: 9%
  • Dividend Yield: 2.01%

iShares Core U.S. Aggregate Bond ETF (AGG) is a very popular ETF that tracks the Total U.S Investment Grade Bond Market. AGG has over $82 billion in fund total net assets.

The fund invests in various sectors and has a low expense ratio.

The market-weighted index includes Treasuries, agencies, CMBS, ABS, and investment-grade corporates.

 

AGG Performance

Blackrock’s AGG aims to have the same performance returns as the Total U.S Investment Grade Bond Market. AGG delivers its underlying index’s returns with precision and consistency.

Here is AGG’s performance chart:

AGG Performance Chart

As you can see, AGG has had steady returns since its inception.

This should be an expectation in the future.

 

AGG Holdings

AGG Holdings

Blackrock’s AGG holds Blackrock Funds, UMBS TBA, U.S Treasury Notes, and over 10,000 other bond holdings.

 

Which Is Better BND or AGG?

BND and AGG are similar investments. They have had the same performance over the last 10 years and have the same expense ratio of 0.03%.

AGG offers more diversification and less volatility since it holds more bonds.

Which is better will likely depend on which brokerage you prefer to use.

Vanguard customers will likely prefer BND.

Blackrock customers will probably choose AGG.

That said, slight differences could make BND better for some investors.

BND offers more liquidity with $83 billion in net assets.

It’s important to consider costs and fees because they can cost you in the long run. That’s why buying and selling your shares commission-free is essential.

Again a great way to do this is with M1 Finance.

You can purchase fractional shares for free, allowing you to buy BND, AGG, and thousands of other stocks/ETFs.

 

Is BND or AGG Better for Financial Independence?

BND and AGG have performed steady enough to be part of your portfolio on your way to Financial Independence Retire Early (FIRE). In addition, they both have low expense ratios.

I usually lean towards the ETF with the lowest fees. But, both BND and AGG have the same expense ratio of 0.03%.

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The next factor is diversification. In this case, AGG wins.

I’m a big fan of Vanguard and own BND as a long-term investment.

Related Posts:

 

My Winner: BOTH

My winner is based on the investor’s preference and the brokerage you use.

The decision comes down to which brokerage you prefer to use.

All options are low-cost ETFs.

Low fees are a guaranteed way to keep more money in your portfolio!

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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