The iShares Core US Aggregate Bond ETF (AGG) offers lower costs, broader diversification, and slightly higher yields compared to the iShares 3-7 Year Treasury Bond ETF (IEI), despite a deeper historical drawdown. Both ETFs invest in cash and U.S. government bonds, with AGG holding over 13,000 positions versus IEI’s 84.

AGG has a lower expense ratio of 0.03% compared to IEI’s 0.15% and a higher yield of 3.9% versus 3.5% for IEI. AGG also experienced a deeper drawdown of -17.83% compared to IEI’s -14.05%.

AGG covers the U.S. investment-grade bond market with over 13,000 securities, while IEI focuses solely on intermediate-term U.S. Treasury bonds with 84 holdings. Both ETFs avoid leverage or currency hedging, focusing on straightforward U.S. bond exposure.

Investors in AGG and IEI over the past five years have seen minimal gains or losses, but the potential for positive returns increases if the Federal Reserve lowers interest rates. AGG’s concentration on the largest debt issuers may not align with all investors’ preferences.

For more information on ETF investing, refer to the full guide at the provided link. Investors considering AGG or IEI should weigh cost, performance, risk, and portfolio makeup to determine which ETF aligns best with their investment goals.

Read more at Yahoo Finance: The iShares Core US Aggregate Bond ETF (AGG) Offers Broader Diversification Than the iShares 3-7 Year Treasury Bond ETF (IEI)