AGG vs. VCIT: The Same Tiny Fee, Completely Different Holdings

Core Insights - The Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and the iShares Core US Aggregate Bond ETF (AGG) are both low-cost options for income-focused investors, but they differ significantly in yield, risk, and portfolio breadth [1][2] Fund Characteristics - VCIT focuses on intermediate-term investment-grade corporate bonds, while AGG provides exposure to the entire U.S. investment-grade bond market, including government, mortgage-backed, and corporate bonds [2][6] - VCIT has a higher dividend yield of 4.6% compared to AGG's 3.9%, which translates to approximately $70 more in annual interest for every $10,000 invested [9] Performance Metrics - Both funds have an expense ratio of 0.03%, but VCIT has a one-year return of 4.36% versus AGG's 3.1% [3][4] - Over the past five years, VCIT experienced a maximum drawdown of -20.56%, while AGG had a drawdown of -17.83% [5] Portfolio Composition - AGG holds a highly diversified portfolio with 13,015 holdings, making it a core holding for investors seeking comprehensive fixed-income exposure [5][6] - VCIT, in contrast, holds only 343 securities, with significant investments in companies like Apple, Meta Platforms, and Pfizer, which may increase credit risk sensitivity [6][9] Investment Strategy - AGG is suitable for risk-averse investors seeking maximum diversification and stability, while VCIT appeals to yield-focused investors willing to accept higher volatility for better income [10]