NYSEMKT: AGG
Key Data Points
What is the iShares Core U.S. Aggregate Bond ETF?
This exchange-traded fund (ETF) passively tracks the Bloomberg U.S. Aggregate Bond Index, a comprehensive benchmark of more than 12,000 bonds. It includes U.S. Treasuries, investment-grade corporate bonds, and mortgage-backed securities (MBS).
Investment-grade means the holdings carry a credit rating of BBB or higher, making them generally lower-risk. The benchmark excludes STRIPS -- bonds where interest and principal payments are separated and sold individually -- and Treasury Inflation-Protected Securities ( TIPS), which are designed to hedge against inflation.
The ETF provides exposure across short-, intermediate-, and long-term maturities, averaging out to the intermediate range overall. Because buying every bond in the index would be impractical, the fund uses sampling, holding a representative selection of the most liquid bonds to closely match the benchmark’s performance.
With more than $132 billion in assets and roughly 6.9 million shares traded daily, it’s one of the most widely held bond ETFs in the world.
Exchange-Traded Fund (ETF)
How to buy the iShares Core U.S. Aggregate Bond ETF
- Open your brokerage account: Log in to the platform where you manage your investments.
- Search for the ETF: Enter the fund’s name or ticker into the search bar.
- Decide how many shares to buy: Consider your investment goals and portfolio allocation.
- Select order type: Choose between a market order to buy at the current price or a limit order to set your maximum price.
- Submit your order: Review the details and place your trade.
- Review your purchase: Confirm that the order was filled and that your allocation aligns with your broader investment plan.
Holdings of the iShares Core U.S. Aggregate Bond ETF
The ETF holds more than 12,000 bonds, giving it one of the broadest profiles of any fixed-income fund. Its high turnover reflects ongoing adjustments to track the index accurately.
By sector, roughly 46% of the portfolio is in Treasuries, followed by 24% in mortgage-backed securities, 14% in industrial corporate bonds, and 8% in financial institutions. Utilities, commercial mortgage-backed securities, and other categories make up smaller slices.
In terms of maturity, the largest share sits in seven- to 10-year bonds (23%), with significant exposure to three- to five-year and five- to seven-year ranges. Only about 10% of holdings extend beyond 20 years.
Most of the bonds are high quality, with almost 73% rated AA, about 12% rated A, and 12% rated BBB.
The fund’s effective duration is 5.85 years, meaning a 1% move in interest rates could lead to an approximate 5.85% change in price in the opposite direction. Its yield to maturity is 4.38%, representing the total expected return if all bonds are held until maturity.
Should I invest in the iShares Core U.S. Aggregate Bond ETF?
This ETF is a classic choice for the bond portion of a 60/40 stock-and-bond portfolio. It can help temper volatility and generate consistent income over time.
For investors who know they need fixed-income exposure but aren’t sure where to start, this fund is a solid core holding that provides broad diversification.
More advanced bond investors or traders may find it too generalized. This bond ETF is a jack-of-all-trades option that lacks targeted exposure to specific maturities or credit risks.
Does the iShares Core U.S. Aggregate Bond ETF pay a dividend?
Yes. The ETF has a 30-day SEC yield of 4.17% and distributes income monthly. Tax efficiency is mixed: interest from the Treasury component is generally exempt from state income tax, while corporate bond interest is taxed as ordinary income. It does not actually pay true dividends like stock ETFs do.
What is the iShares Core U.S. Aggregate Bond ETF’s expense ratio?
The expense ratio represents the annual cost of managing and operating the fund, expressed as a percentage of assets. This ETF charges just 0.03%, or $3 per $10,000 invested, making it one of the lowest-cost options available.
Expense Ratio
Historical performance of iShares Core U.S. Aggregate Bond ETF
1y | 3y | 5y | 10y | |
Net Asset Value | 2.89% | 4.92% | -0.45% | 1.80% |
Market Price | 2.90% | 4.91% | -0.44% | 1.80% |
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The bottom line
This ETF remains the simplest and most cost-effective way to capture a wide swath of the total U.S. investment-grade bond market. It’s ideal for long-term investors seeking broad diversification, moderate income, and a smoother ride when equities fluctuate.
While it won’t deliver high yields or tactical precision, it does exactly what it promises: providing stable, diversified bond exposure at minimal cost and with high liquidity.
