The iShares Core US Aggregate Bond ETF (AGG) has a lower expense ratio and higher yield than the iShares National Muni Bond ETF (MUB). AGG boasts stronger 1-year returns but a deeper five-year drawdown, covering the entire U.S. investment-grade bond market. In contrast, MUB focuses solely on municipal bonds.

AGG, with a $136.5 billion AUM, offers a 0.8% higher yield than MUB, with a $42.0 billion AUM. AGG holds 13,015 U.S. investment-grade bond positions, while MUB has 6,098 municipal bond holdings. Both ETFs have low costs, high liquidity, and serve as core fixed income investments with differing risk profiles and yields.

AGG is more tax-efficient for investors in higher brackets due to its taxable 3.9% yield, while MUB’s tax-exempt 3.1% yield is attractive for lower tax brackets. AGG’s broader diversification across bond types makes it suitable for retirement accounts, while MUB’s focus on municipal bonds suits those seeking tax-advantaged income. The choice between AGG and MUB depends on individual tax situations and investment goals.

Bond ETFs like AGG and MUB provide stability and income in portfolios. AGG offers a broader mix of U.S. investment-grade bonds, including Treasuries and corporate debt, with a fully taxable 3.9% yield. In contrast, MUB invests solely in tax-exempt municipal bonds, offering a lower 3.1% yield that is more tax-efficient for high earners. AGG’s lower expense ratio and larger size provide superior liquidity compared to MUB.

Read more at Yahoo Finance: Your Tax Bracket Decides the Winner Between AGG and MUB