AGG vs. VTEB
AGG (iShares Core U.S. Aggregate Bond ETF) and VTEB (Vanguard Tax-Exempt Bond ETF) are both exchange-traded funds - AGG is a Total Bond Market fund tracking the Bloomberg U.S. Aggregate Bond Index, while VTEB is a Municipal Bonds fund tracking the S&P National AMT-Free Municipal Bond Index. Both are passively managed. Over the past 10 years, AGG returned 1.57%/yr vs 2.03%/yr for VTEB. A 0.68 correlation means they provide meaningful diversification when combined. Both charge a 0.03% expense ratio.
Performance
AGG vs. VTEB - Performance Comparison
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Returns By Period
In the year-to-date period, AGG achieves a 0.52% return, which is significantly lower than VTEB's 1.44% return. Over the past 10 years, AGG has underperformed VTEB with an annualized return of 1.57%, while VTEB has yielded a comparatively higher 2.03% annualized return.
AGG
- 1D
- -0.12%
- 1M
- 0.46%
- YTD
- 0.52%
- 6M
- 0.93%
- 1Y
- 4.87%
- 3Y*
- 4.19%
- 5Y*
- 0.06%
- 10Y*
- 1.57%
VTEB
- 1D
- -0.08%
- 1M
- 0.78%
- YTD
- 1.44%
- 6M
- 1.95%
- 1Y
- 6.57%
- 3Y*
- 3.44%
- 5Y*
- 0.80%
- 10Y*
- 2.03%
AGG vs. VTEB - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
AGG iShares Core U.S. Aggregate Bond ETF | 0.52% | 7.19% | 1.31% | 5.65% | -13.02% | -1.77% | 7.48% | 8.46% | 0.09% | 3.55% |
VTEB Vanguard Tax-Exempt Bond ETF | 1.44% | 3.72% | 1.31% | 6.15% | -7.99% | 1.14% | 5.19% | 7.35% | 1.04% | 4.87% |
Correlation
The correlation between AGG and VTEB is 0.69, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.69 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.78 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.73 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.68 |
Correlation (All Time) Calculated using the full available price history since Aug 25, 2015 | 0.68 |
The correlation between AGG and VTEB shifts across timeframes, from 0.68 (all time) to 0.78 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
AGG vs. VTEB — Risk / Return Rank
AGG
VTEB
AGG vs. VTEB - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for iShares Core U.S. Aggregate Bond ETF (AGG) and Vanguard Tax-Exempt Bond ETF (VTEB). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.
| AGG | VTEB | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -1.19 | ||
| Sortino ratioReturn per unit of downside risk | -1.73 | ||
| Omega ratioGain probability vs. loss probability | 1.21 | 1.51 | -0.30 |
| Calmar ratioReturn relative to maximum drawdown | 1.63 | 2.35 | -0.71 |
| Martin ratioReturn relative to average drawdown | 4.82 | 8.30 | -3.48 |
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Drawdowns
AGG vs. VTEB - Drawdown Comparison
The maximum AGG drawdown since its inception was -18.43%, which is greater than VTEB's maximum drawdown of -17.00%. Use the drawdown chart below to compare losses from any high point for AGG and VTEB.
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Drawdown Indicators
| AGG | VTEB | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -18.43% | -17.00% | -1.43% |
Max Drawdown (1Y)Largest decline over 1 year | -2.76% | -2.71% | -0.05% |
Max Drawdown (3Y)Largest decline over 3 years | -6.11% | -5.53% | -0.58% |
Max Drawdown (5Y)Largest decline over 5 years | -17.82% | -12.64% | -5.18% |
Max Drawdown (10Y)Largest decline over 10 years | -18.43% | -17.00% | -1.43% |
Current DrawdownCurrent decline from peak | -1.88% | -0.54% | -1.34% |
Average DrawdownAverage peak-to-trough decline | -2.71% | -2.32% | -0.39% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.94% | 0.77% | +0.17% |
Volatility
AGG vs. VTEB - Volatility Comparison
iShares Core U.S. Aggregate Bond ETF (AGG) has a higher volatility of 1.37% compared to Vanguard Tax-Exempt Bond ETF (VTEB) at 0.93%. This indicates that AGG's price experiences larger fluctuations and is considered to be riskier than VTEB based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| AGG | VTEB | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.37% | 0.93% | +0.44% |
Volatility (6M)Calculated over the trailing 6-month period | 2.81% | 2.04% | +0.77% |
Volatility (1Y)Calculated over the trailing 1-year period | 3.82% | 2.70% | +1.12% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.09% | 3.90% | +2.19% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.41% | 5.26% | +0.15% |
AGG vs. VTEB - Expense Ratio Comparison
Both AGG and VTEB have an expense ratio of 0.03%, making them cost-effective options compared to the broader market, where average expense ratios typically range from 0.3% to 0.9%.
Dividends
AGG vs. VTEB - Dividend Comparison
AGG's dividend yield for the trailing twelve months is around 3.98%, more than VTEB's 3.36% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
AGG iShares Core U.S. Aggregate Bond ETF | 3.98% | 3.89% | 3.74% | 3.13% | 2.39% | 1.77% | 2.14% | 2.70% | 2.72% | 2.32% | 2.39% | 2.45% |
VTEB Vanguard Tax-Exempt Bond ETF | 3.36% | 3.29% | 3.14% | 2.79% | 2.09% | 1.64% | 1.99% | 2.30% | 2.25% | 1.96% | 1.66% | 0.58% |
Frequently Asked Questions
AGG and VTEB have a correlation of 0.69, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.
AGG has higher volatility (1.37%) compared to VTEB (0.93%). In terms of maximum drawdown, AGG dropped -18.43% vs VTEB's -17.00%.
On 10-year performance, VTEB leads with 2.03% vs 1.57% for AGG. Both ETFs have the same 0.03% expense ratio. On volatility, VTEB has been the lower-risk option at 0.93%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, VTEB has performed better with a 2.03% return vs 1.57%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
AGG and VTEB have the same expense ratio: 0.03% per year.
AGG has the higher dividend yield at 3.98%, compared with 3.36% for VTEB.
AGG is categorized as Total Bond Market, while VTEB is Municipal Bonds. AGG tracks Bloomberg U.S. Aggregate Bond Index, while VTEB tracks S&P National AMT-Free Municipal Bond Index. They also come from different issuers: iShares and Vanguard.
VTEB currently has the higher Sharpe Ratio (2.38 vs 1.19), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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