BND vs SCHZ

BNDAVanguard Total Bond Market ETF

SCHZASchwab U.S. Aggregate Bond ETF

In short

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.'

SCHZ Schwab's core bond holding: the broad U.S. investment-grade bond market, over 10,000 issues deep, for 0.03% a year. That is the floor of a category whose median fee is more than ten times higher. Running since 2011, pays monthly.

Stated mandate

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.

SCHZ The fund seeks to track the total return of an index representing the broad U.S. investment-grade bond market.

Why people hold it

• 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.

• SCHZ 0.03% a year sits at the category floor, against a cohort median of 0.36%. Only a short list of aggregate-bond funds matches it, including AGG, BND and SPAB.
• Tracks the Bloomberg US Aggregate Bond Index tightly, one of the cleanest index implementations among the 187 funds in its peer group.schwabassetmanagement.com
• One ticker, thousands of investment-grade U.S. bonds, income paid monthly. The plumbing of a bond portfolio without buying a single bond yourself.
• Live since 2011 and now a multi-billion-dollar fund that trades actively, so trading costs on ordinary retail-sized orders tend to be minor.

Worth knowing

• 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.

• SCHZ This is duration exposure, not a cash substitute. Interest-rate moves, not credit selection, drive most of the ride, and that is the weakest part of its risk profile.
• Investment grade and U.S. only: no high-yield, no foreign bonds. Funds like BNDX cover the international side of the cohort.
• The aggregate-bond aisle is commoditized. Against AGG, BND and SPAB at the same 0.03%, the differences come down to index variant and where you already custody, not fee.

Full BND profile⁠

Full SCHZ profile⁠