AGG vs FLIA

AGGAiShares Core U.S. Aggregate Bond ETF

FLIABFranklin International Aggregate Bond 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.

FLIA Bonds from everywhere except America, with the currency swings hedged away. FLIA holds non-dollar debt against the Bloomberg Global Aggregate ex-USD Hedged benchmark, at a fee below what the typical aggregate bond ETF charges.

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.

FLIA The Fund seeks total return through an international aggregate fixed-income strategy. Its mandate includes exposure to non-U.S.-dollar-denominated securities and currency-management techniques intended to hedge foreign-currency exposure.

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.

• FLIA Charges 0.25% a year, under the going rate for aggregate bond ETFs. Cheap is rare in the ex-US corner of the bond market.
• The mandate pairs non-dollar bonds with currency-management techniques meant to hedge foreign-exchange exposure, so foreign rates and credit do the work instead of the dollar.
• Running since 2018 as a plain 1940 Act ETF, it has a real operating history behind it rather than a launch-week story.
• Franklin has grown it into a mid-size fund that trades with moderate regularity, which stands out among specialist international bond products.

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.

• FLIA Core US bond ETFs cost far less: BND, SPAB and SCHZ run 0.03% and BNDX 0.07%. The premium here buys the hedged ex-US mandate, not broader coverage.
• Hedging targets currency swings, not the bonds themselves. Foreign interest-rate moves and credit risk still flow through, and hedging carries its own cost.
• About 80 positions, a tighter lineup than broad aggregate funds that hold thousands of bonds, so individual issuers and countries carry more weight.

Full AGG profile⁠

Full FLIA profile⁠