How does bond duration affect AGG and BND in different interest rate environments?

Duration (measured in years) quantifies a bond's sensitivity to interest rate changes: a bond with 7-year duration loses approximately 7% in price for each 1% increase in interest rates (and gains ~7% for each 1% decrease). AGG and BND have effective durations of approximately 6-7 years. In a rising rate environment: each 1% increase in the Fed funds rate causes ~6-7% mark-to-market price decline in AGG/BND; coupon income remains constant (bonds in the fund pay fixed interest); existing bonds in the portfolio mature and are reinvested in new bonds at higher yields; over 6-7 years (the duration period), the higher reinvestment yields offset the initial price loss and total return recovers. In a falling rate environment: existing bonds appreciate in price as rates fall; reinvestment happens at lower yields. For investors with 5+ year time horizons, bond duration risk is manageable — short-term losses from rising rates are recovered through higher yields over the duration period.

What is the difference between owning bonds directly versus an ETF like AGG or BND?

Owning individual bonds versus a bond ETF like AGG/BND involves key tradeoffs: Individual bonds: guaranteed return of principal at maturity (if issuer doesn't default); fixed income stream; you hold the bond to maturity and know exactly what you will receive; zero ongoing expense ratio cost; but: you need significant capital to diversify properly (bonds typically trade in $1,000-10,000 lots); transaction costs are high (wide bid-ask spreads in over-the-counter bond markets); and you must manage reinvestment of maturing bonds. Bond ETF (AGG/BND): instant diversification across 10,000 bonds for any amount; continuous maturity (new bonds purchased as old ones mature — the fund never 'matures'); daily liquidity at stock-market bid-ask spreads; 0.03% ongoing cost; but: share price fluctuates daily with interest rates and spreads (no guaranteed return of principal at any specific date); and you can't hold to maturity since the fund rolls continuously. For most retail investors, ETFs are more practical; individual bonds suit investors with specific cash flow timing needs or high capital to build diversified ladders.

What role do bonds play in a diversified investment portfolio?

Bonds serve several roles in a diversified portfolio: Risk reduction and volatility dampening — bonds historically have low to negative correlation with stocks during equity market stress; in stock market crashes (2008-2009, COVID March 2020), high-quality bonds like Treasuries typically gain in price as investors flee to safety, partially offsetting equity losses; Income generation — bonds pay regular coupon interest; for income-oriented investors (retirees, endowments), bond interest provides predictable cash flows; Diversification — combining stocks and bonds creates portfolios with better risk-adjusted returns than either alone (the efficient frontier); Capital preservation — investment-grade bonds (particularly U.S. Treasuries) are lower risk than equities; for conservative investors or those with short time horizons, bonds provide more stable store of value; Inflation protection with TIPS — TIPS (Treasury Inflation-Protected Securities) adjust principal for inflation, protecting purchasing power. The traditional '60/40 portfolio' (60% stocks, 40% bonds) was the standard balanced allocation for decades; the relationship between stocks and bonds can vary (in 2022 when both fell due to rising inflation and rates, the diversification benefit was reduced).

brimindinvest.com / compare / agg-vs-bndLIVE

AGG

iShares Core US Aggregate Bond ETF · ETF - U.S. Investment Grade Bonds

$98.90

+1.64% this month

VERSUS

⟷

COMPARE

BND

Vanguard Total Bond Market ETF · ETF - U.S. Investment Grade Bonds

$73.34

+1.57% this month

Scoreboard verdict

Across expense ratio, momentum, yield, fund size, risk

AGG

3

BND

1

AGG LEADS 3/5

Comparison scoreboard

AGG LEADS 3/5

Exp. Ratio

AGG 0.03%

BND 0.03%

1Y Return

AGG ✓+4.83%

BND +4.73%

Div. Yield

AGG ✓3.96%

BND 3.94%

AUM

AGG $136.46B

BND ✓$394.43B

Beta

AGG ✓0.25

BND 0.25

Metrics last refreshed: 6/20/2026

Quick take

AGG vs BND Stock Comparison: AI Score, Valuation, Performance and Upside

AGG (iShares Core US Aggregate Bond ETF) and BND (Vanguard Total Bond Market ETF) are functionally interchangeable core investment-grade bond ETFs — both track essentially the same Bloomberg US Aggregate Bond Index composition, both charge 0.03% expense ratios, both have similar interest rate duration (~6-7 years), and both provide the same diversified exposure to U.S. Treasuries, mortgage-backed securities, and investment-grade corporate bonds. The practical choice between AGG and BND is almost entirely a matter of brokerage preference (AGG for iShares/BlackRock ecosystem users, BND for Vanguard users).

AGG vs BND is two nearly identical core U.S. investment-grade bond ETFs at identical cost — iShares/BlackRock's AGG with slightly higher AUM and trading liquidity versus Vanguard's BND with the investor-owned governance structure alignment and three-fund portfolio integration — effectively the same product in two different packaging.

Live analysis · updated 6/20/2026

AGG holds the edge across 3 of 5 key metrics in this comparison. AGG has delivered stronger 1-year price return (+4.83% vs +4.73% for BND).

Normalized 1Y performance

AGG

BND

Recent returns

AGG

BND

Who should consider this stock?

AGG may suit investors who:

→Use iShares ETFs across their portfolio (AGG, IVV, IEFA) and prefer BlackRock's iShares ecosystem for portfolio consistency or advisor-managed accounts that default to iShares products
→Need maximum bond ETF liquidity for large institutional trades or frequent rebalancing — AGG's slightly higher trading volume provides marginally tighter bid-ask spreads for large transactions
→Invest through a brokerage where AGG is commission-free or has lower transaction costs than BND

BND may suit investors who:

→Build a Vanguard three-fund portfolio (VTI + VXUS + BND) as the classic bond allocation component — BND pairs naturally with VTI and VXUS for a complete, low-cost diversified portfolio
→Value Vanguard's investor-owned structure as providing long-term governance alignment toward cost minimization that a profit-driven asset manager cannot structurally match
→Invest at Vanguard brokerage where BND is commission-free and integrates with Vanguard's portfolio analysis and tax-loss harvesting tools

Performance & AI score

Metric	AGG	BND
ETF score	59.0	51.0
Latest close	$98.90	$73.34
1M return	+1.64%	+1.57%
6M return	+0.81%	+0.76%
1Y return	+4.83%	+4.73%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

Period	AGG	BND
1Y ago	$10.91K (+9.1%) started 2025-06-18	$10.9K (+9.0%) started 2025-06-18
5Y ago	$11.9K (+19.0%) started 2021-06-18	$11.92K (+19.2%) started 2021-06-18
10Y ago	$16.22K (+62.2%) started 2016-06-20	$16.61K (+66.1%) started 2016-06-20

Hypothetical — past performance does not guarantee future results.

Fund characteristics

Metric	AGG	BND
Expense ratio	0.03%	0.03%
Total assets (AUM)	$136.46B	$394.43B
Dividend yield	3.96%	3.94%
Trailing P/E	126.15	N/A
Beta	0.25	0.25
52-week change	4.83%	4.73%

Risk & fund metrics

Metric	AGG	BND
1Y return	+4.83%	+4.73%
6M return	+0.81%	+0.76%
1M return	+1.64%	+1.57%
1Y Sharpe ratio	0.08	0.06
Beta	0.25	0.25
Dividend yield	3.96%	3.94%
5Y CAGR	+0.08%	+0.04%

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

AGG max drawdown2.76%

BND max drawdown2.68%

AGG max wkly drop1.17%

BND max wkly drop1.10%

5Y risk snapshot

AGG max drawdown17.82%

BND max drawdown17.91%

AGG max wkly drop3.48%

BND max wkly drop3.50%

10Y risk snapshot

AGG max drawdown18.43%

BND max drawdown18.58%

AGG max wkly drop7.10%

BND max wkly drop8.05%

Performance metrics by period

Period	Metric	AGG	BND
1Y	Growth	+4.83%	+4.73%
	CAGR	+4.84%	+4.73%
	Sharpe ratio	0.08	0.06
	Max drawdown	2.76%	2.68%
	Max daily drop	0.83%	0.80%
	Max wkly drop	1.17%	1.10%
5Y	Growth	+0.38%	+0.19%
	CAGR	+0.08%	+0.04%
	Sharpe ratio	-0.70	-0.71
	Max drawdown	17.82%	17.91%
	Max daily drop	1.64%	1.62%
	Max wkly drop	3.48%	3.50%
10Y	Growth	+17.42%	+17.99%
	CAGR	+1.62%	+1.67%
	Sharpe ratio	-0.51	-0.49
	Max drawdown	18.43%	18.58%
	Max daily drop	4.00%	5.44%
	Max wkly drop	7.10%	8.05%

Fund overview

Category	AGG	BND
Fund name	iShares Core U.S. Aggregate Bond ETF	Vanguard Total Bond Market Index Fund
Type	ETF	ETF
Expense ratio	0.03%	0.03%
Total assets (AUM)	$136.46B	$394.43B
Dividend yield	3.96%	3.94%

AGG strengths

→Comprehensive investment-grade bond market exposure in one ETF — AGG provides diversified exposure to the entire U.S. investment-grade bond market including Treasuries, MBS, and corporate bonds in proportions matching the overall market
→High liquidity with tight bid-ask spreads — AGG trades billions of dollars daily with institutional trading activity; this liquidity enables large institutional purchases and sales without significant price impact
→iShares brand and BlackRock's fixed income expertise — BlackRock is the world's largest asset manager with extensive fixed income portfolio management experience and extensive securities lending that can minimize AGG's net cost

BND strengths

→Vanguard investor-owned structure drives persistent cost minimization — Vanguard's unique structure creates structural incentive to keep costs low forever, not just when competing with BlackRock; this alignment between fund manager and investor interests is a long-term governance advantage
→Nearly identical portfolio to AGG with equivalent cost — BND and AGG are practically interchangeable; both track Bloomberg Aggregate variations at 0.03%; the choice is primarily about fund family preference
→Massive scale enabling low transaction costs — BND's $300B+ in combined assets provides Vanguard negotiating leverage for bond trading transaction costs and enables efficient portfolio management

Risks to watch — AGG

→Duration risk — AGG's ~6-7 year duration means a 1% rise in interest rates causes approximately 6-7% price decline; investors holding AGG in a rising rate environment experience mark-to-market losses that recover only as the portfolio rolls to higher-yielding bonds over time
→Mortgage-backed securities complexity — AGG's ~27% MBS allocation introduces prepayment risk (homeowners refinance when rates fall, reducing MBS duration just when investors want longer duration) and credit exposure to government-sponsored enterprises
→Corporate bond credit risk — AGG's investment-grade corporate bond allocation (~24%) can underperform in credit stress periods when corporate bond spreads widen

Risks to watch — BND

→Duration risk is identical to AGG — BND's ~6-7 year duration creates the same interest rate sensitivity as AGG; rising rates cause temporary mark-to-market losses that recover over the duration period
→Float-adjusted index creates minor portfolio differences from AGG — BND's Bloomberg Float Adjusted benchmark versus AGG's Bloomberg Aggregate creates very minor composition differences primarily in Treasury holdings; practically irrelevant for most investors
→Bond market liquidity in stress periods — in market stress events (COVID March 2020, October 2023 rate spike), even high-quality bond ETFs like AGG and BND can see bid-ask spreads widen and brief premiums/discounts to NAV

Frequently asked questions

The Bloomberg US Aggregate Bond Index (Bloomberg Agg, formerly Barclays Agg) is the standard benchmark for U.S. investment-grade fixed income — the bond equivalent of the S&P 500. The Agg includes: U.S. Treasury securities (bills, notes, bonds) and Treasury Inflation-Protected Securities (TIPS); government agency bonds (issued by Fannie Mae, Freddie Mac, Ginnie Mae); mortgage-backed securities (MBS — pools of residential mortgages securitized by government-sponsored enterprises); investment-grade corporate bonds (BBB-rated and above); and other investment-grade debt. To be included, bonds must: be denominated in USD; have a minimum $300M outstanding; have at least one year to maturity; and have investment-grade credit ratings (BBB-/Baa3 or higher from S&P/Moody's). The Agg covers approximately $25 trillion in outstanding bonds, representing the investable U.S. investment-grade bond market.

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