Although it isn’t the country’s largest bond-oriented exchange-traded fund, iShares Barclays Aggregate Bond Fund (symbol AGG) may be the best-known. That’s because it tracks the Barclays Capital U.S. Aggregate Bond index, a much-used proxy for the broader fixed-income market.
The "Agg,” as the index is often called, includes a wide range of investment-grade U.S. bonds, so “it’s like the S&P 500 for fixed income,” says Matt Tucker, of iShares. It’s also why this ETF is a popular core fixed-income holding. The index includes only dollar-denominated, taxable fixed-rate debt issued in the U.S., such as corporate bonds of both domestic and foreign firms, Treasuries, government-agency bonds, and mortgage- and other asset-backed bonds.
Like most bond ETFs, this iShares offering doesn’t exactly match its index, which in this case comprises about 8,000 securities. The fund creates a representative sample with about 1,500 holdings and sometimes buys a new issue ahead of the Agg—or sells one before or after the index has dropped it. Keeping the timing a little loose allows the fund to buy at better prices and “helps us track the index better long term,” Tucker says.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Agg adds and drops issues at the end of every month. To keep up with the benchmark, the ETF typically turns over its portfolio at an annual rate of about 130%, suggesting that the average holding stays in the fund for less than a year.
Kiplinger's Investing for Income will help you maximize your cash yield under any economic conditions. Download the premier issue for free.
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
How to Manage Risk With Diversification"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolio.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
