IAGG vs SCHZ

IAGGAiShares Core International Aggregate Bond ETF

SCHZASchwab U.S. Aggregate Bond ETF

In short

IAGG The other half of the bond market, in dollars. IAGG holds investment-grade debt issued outside the US, developed and emerging, and hedges the currency swings back to USD for seven basis points.

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

IAGG The fund seeks to track an index representing global investment-grade bonds outside the United States, with exposure across developed and emerging markets and currency hedging to the U.S. dollar.

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

• IAGG 0.07% a year for a global bond book. The median fund in its aggregate-bond peer group charges around 0.36%, and it is priced level with rival BNDX.
• Currency exposure is hedged to the dollar, so results track the bonds themselves rather than moves in the yen, euro or pound.ishares.com
• Roughly 7,900 bonds spanning developed and emerging markets outside the US, with a 10% issuer cap in the index keeping any one borrower in check.
• Running since 2015 inside the iShares Core lineup, a multi-billion-dollar fund that trades actively and pays quarterly.

• 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

• IAGG The hedge works both ways. It strips out currency losses and currency gains alike, so a sliding dollar adds nothing here.
• No US bonds at all. It is built as the ex-US complement to a domestic core holding such as BND or IUSB, not a standalone bond sleeve.
• Hedging covers currency, not duration. These are investment-grade bonds, and their prices still move as global interest rates move.

• 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 IAGG profile⁠

Full SCHZ profile⁠