AGG vs BND

AGGAiShares Core U.S. Aggregate Bond ETF

BNDAVanguard Total Bond Market ETF

In short

AGG Launched in 2003, one of the first funds to pack the entire U.S. investment-grade bond market into a single ticker: Treasuries, corporates and mortgage bonds, three basis points a year, cash paid monthly.

BND The whole taxable US investment-grade bond market in one ticker for three basis points. Vanguard's core bond workhorse since 2007, now a $100B-plus fund and the thing most people picture when they say 'bond fund.'

Stated mandate

AGG The fund seeks to track the Bloomberg U.S. Aggregate Bond Index, providing broad exposure to the total U.S. investment-grade bond market.

BND The fund seeks to track a broad U.S. investment-grade bond benchmark. It uses passive sampling to provide diversified exposure to taxable, U.S. dollar-denominated bonds.

Why people hold it

• AGG 0.03% a year against a peer-group median near 0.36%. On a bond fund, the fee comes straight out of the coupon, so the gap matters more than it looks.
• A $100 billion-plus fund and very actively traded, the kind of depth that keeps bid-ask costs down for retail-sized orders.
• Tracks the Bloomberg U.S. Aggregate closely, with one of the tightest index-following records in its peer group. Income is distributed monthly.
• Running since 2003, giving it one of the longest track records among U.S. bond index ETFs.

• BND Charges 0.03%, roughly a tenth of the typical core bond ETF's fee. Nothing in the category charges less; SPAB and SCHZ tie it, and even Vanguard's own VCRB on the same benchmark costs more.
• Tracks the Bloomberg U.S. Aggregate Float Adjusted Index about as tightly as the data allows, and trades heavily enough that spreads rarely become the story.
• Pays monthly, runs over $100B, and has been operating since 2007. One of the most durable implementations in the core bond group.

Worth knowing

• AGG Investment grade and U.S. dollar only. High-yield debt and foreign bonds sit outside the mandate, so this is designed as core ballast rather than a yield hunt.
• Rate risk comes as it comes. The index gets tracked whether yields rise or fall, with no manager stepping in to shorten duration.
• The same index is sold by SPAB, SCHZ and BBAG at the same 0.03%. The portfolio is the commodity here; scale and trading depth are the tiebreakers.

• BND This is a bond index fund, not a cash sleeve. Prices move opposite interest rates, and the broad Aggregate carries real duration risk.
• Taxable, US dollar, investment grade only. No high yield, no municipals, no non-US bonds, so income comes from the safer end of the credit ladder.
• It samples the index rather than owning every bond in it, so holdings track the benchmark's shape instead of replicating it line for line.

Full AGG profile⁠

Full BND profile⁠