AGG — iShares Core US Aggregate Bond ETF
AGG is iShares' flagship broad bond ETF, tracking the Bloomberg US Aggregate Bond Index and holding thousands of investment-grade US bonds. It covers Treasuries, agency MBS, investment-grade corporates, and other debt with remaining maturity over one year. AGG is among the most heavily traded bond ETFs in the world, with deep liquidity. Its 0.03% expense ratio matches the cheapest available in fixed income.
Top Holdings
Strategy
- →Use as a core bond holding in any diversified portfolio as a low-cost market-cap-weighted approach
- →Pair with equity ETFs like SPY or VTI for a classic balanced portfolio
- →Use in tax-advantaged accounts (IRA/401k) where tax-exempt munis provide no extra benefit
- →Ladder with shorter-duration bond funds to manage interest rate sensitivity
Best For
- ✓Investors seeking a one-stop US investment-grade bond exposure at minimal cost
- ✓Those using iShares products who want parity with Vanguard's BND offering
- ✓Institutional and retail investors who value extreme liquidity for large trades
- ✓Passive fixed-income allocators who want broad diversification without active management
Key Risks
- ⚠Interest rate sensitivity — duration of approximately 6 years means price declines when rates rise
- ⚠Inflation erodes the real return of nominal fixed-rate bonds
- ⚠Corporate bond weighting (~25%) exposes the fund to credit spread widening in downturns
- ⚠Low yield in low-rate environments may not meet income needs
Similar ETFs
Frequently Asked Questions
What is AGG's current yield?
AGG's yield fluctuates with interest rates and the portfolio's coupon composition. Check iShares.com for the current 30-day SEC yield. This is educational content, not financial advice.
Is AGG a good investment during inflation?
AGG holds primarily nominal bonds, which tend to underperform during high inflation because fixed coupon payments lose purchasing power. TIPS-focused ETFs like TIPS or VTIP may be better inflation hedges. This is educational content, not financial advice.
How often does AGG pay dividends?
AGG distributes monthly dividends from interest income collected on its bond holdings. This is educational content, not financial advice.
What is the difference between AGG and BND?
Both track variants of the Bloomberg US Aggregate Bond Index and charge 0.03%. AGG uses the standard index while BND uses a float-adjusted version. Practical differences in performance are negligible. This is educational content, not financial advice.
Can AGG lose money?
Yes. While AGG holds investment-grade bonds, it can lose value when interest rates rise significantly. During the 2022 rate-hiking cycle, AGG fell over 13%. This is educational content, not financial advice.
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