AGG vs LDSF

AGGAiShares Core U.S. Aggregate Bond ETF

LDSFCFirst Trust Low Duration Strategic Focus 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.

LDSF A one-ticket bond sleeve kept on a short leash: LDSF blends income ETFs, largely First Trust's own, to an effective duration of three years or less. Current income is the stated goal, capital preservation the backup.

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.

LDSF The Fund seeks current income and secondarily preservation of capital. It normally invests at least 80% of net assets in U.S.-listed ETFs principally investing in income-generating securities with effective portfolio duration of three years or less.

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.

• LDSF Mandate pins effective portfolio duration at three years or less, the documented lever for keeping rate-driven price swings smaller than a full-maturity bond fund's.sec.gov
• One ticket spans mortgages, investment grade corporates, high yield, senior loans and preferreds, with the prospectus capping high yield and senior loans at 40% of net assets.sec.govotcmarkets.com
• First Trust's team shifts the mix as its rate and credit read changes; the advisory fee is a thin slice, with most of the 0.87% total coming from the ETFs held inside.ftportfolios.com
• Income is the stated first objective and preservation of capital the second, and the fund pays monthly.

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.

• LDSF At 0.87% all in, it costs more than the typical fund in its category, and far more than core index trackers like AGG and BND at 0.03%.
• It trades thinly next to those giants, which can mean wider bid-ask spreads and more care on order size.
• Most of the ETFs inside are First Trust's own, a conflict the prospectus discloses, so you get one house's allocation call rather than a broad-market index.otcmarkets.com

Full AGG profile⁠

Full LDSF profile⁠