BND vs AGG: The Two Biggest Bond ETFs Look Identical, but One Has Quietly Won for Years

Vanguard Total Bond Market ETF (BND) and iShares Core U.S. Aggregate Bond ETF (AGG) track nearly the same broad benchmark, hold large portfolios of investment-grade bonds, and have very low fees, but the article says BND has quietly delivered a small long-term edge. It frames the context with current Treasury conditions: the 10-year yield at 4.65% sits near the top of its 12-month range, and the 10-year minus 2-year spread is 0.35%, supporting stronger aggregate-bond income. Both funds function as “core” holdings with intermediate duration and heavy exposure to Treasuries, agency mortgage-backed securities, and high-grade corporates. The difference comes from BND’s float-adjusted index approach, which excludes bonds held by the Federal Reserve and other non-market participants. The piece cites BND’s 10-year total return around 15% versus AGG’s roughly 15%, while noting performance gaps are small and can compound over time.