An institutional client recently asked us what the largest Fixed Income ETF in the U.S. listed universe is currently, and although it is a reasonably tight race at the moment, BND (Vanguard Total Bond Market, Expense Ratio 0.08%) ranks at the top with $27.4 billion in assets under management.
Having debuted in 2007, it usurped the top position from AGG (iShares Core Total U.S. Bond Market, Expense Ratio 0.08%) some time ago and has not looked back. Both funds have had strong inflows year to date, both taking in north of $1 billion via creation activity.
After BND, AGG, and the third largest Fixed Income ETF LQD (iShares Investment Grade Corporate Bond, Expense Ratio 0.15%), there is a steep drop-off in terms of assets under management throughout the rest of the FI ETF landscape, so BND, AGG, and LQD are truly giants within this niche. BND tracks the Barclays Capital U.S. Aggregate Bond Index while AGG tracks you guessed it, the Barclays Capital U.S. Aggregate Bond Index.
Both funds as seen above have identical expense ratios at a very low 8 basis points. It is also worth pointing out that both of these funds rank among the top twenty U.S. listed ETFs in general, in terms of overall asset sizes, showing their heft.
When it comes down to it, institutional entities, investment managers such as ETF strategists, as well as retail investors may have a natural affinity towards one issuer over the other here, those being Vanguard or iShares, as it would be hard to argue that one product is supremely “better” than the other as both are viable selections and individual preference may make the ultimate call here.
Of course, items like tracking error and performance over time versus NAV are certainly examined by all of the aforementioned potential investors for both of these products as well as trade-ability and “liquidity,” which really should not be concerns for either product as sizable notional dollar positions can be put on and taken off with ease in most circumstances. For specific color or questions in terms of isolating the “best fit” to tailor for your portfolios, kindly contact the trading desk.
Vanguard Total Bond Market ETF
For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.