VMBS vs. AGG
VMBS (Vanguard Mortgage-Backed Securities ETF) and AGG (iShares Core U.S. Aggregate Bond ETF) are both exchange-traded funds - VMBS is a Mortgage Backed Securities fund tracking the Barclays Capital U.S. MBS Index, while AGG is a Total Bond Market fund tracking the Bloomberg U.S. Aggregate Bond Index. Both are passively managed. Over the past 10 years, VMBS returned 1.39%/yr vs 1.59%/yr for AGG. A 0.79 correlation means they provide meaningful diversification when combined. VMBS charges 0.04%/yr vs 0.03%/yr for AGG.
Performance
VMBS vs. AGG - Performance Comparison
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Returns By Period
In the year-to-date period, VMBS achieves a 1.00% return, which is significantly higher than AGG's 0.66% return. Over the past 10 years, VMBS has underperformed AGG with an annualized return of 1.39%, while AGG has yielded a comparatively higher 1.59% annualized return.
VMBS
- 1D
- 0.28%
- 1M
- 0.93%
- YTD
- 1.00%
- 6M
- 1.13%
- 1Y
- 6.39%
- 3Y*
- 4.57%
- 5Y*
- 0.60%
- 10Y*
- 1.39%
AGG
- 1D
- 0.29%
- 1M
- 1.03%
- YTD
- 0.66%
- 6M
- 0.70%
- 1Y
- 4.84%
- 3Y*
- 4.07%
- 5Y*
- 0.08%
- 10Y*
- 1.59%
VMBS vs. AGG - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 1.00% | 8.36% | 1.70% | 5.34% | -11.90% | -1.28% | 3.76% | 6.19% | 0.91% | 2.47% |
AGG iShares Core U.S. Aggregate Bond ETF | 0.66% | 7.19% | 1.31% | 5.65% | -13.02% | -1.77% | 7.48% | 8.46% | 0.09% | 3.55% |
Correlation
The correlation between VMBS and AGG is 0.95 - these two move nearly in lockstep. At this level, holding both provides almost no diversification benefit. If you already own one, adding the other does little to reduce portfolio risk.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.95 |
Correlation (3Y) Calculated over the trailing 3-year period | 0.97 |
Correlation (5Y) Calculated over the trailing 5-year period | 0.95 |
Correlation (10Y) Calculated over the trailing 10-year period | 0.88 |
Correlation (All Time) Calculated using the full available price history since Nov 23, 2009 | 0.79 |
The correlation between VMBS and AGG shifts across timeframes, from 0.79 (all time) to 0.97 (3 years), reflecting how their relationship changes across market environments.
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Return for Risk
VMBS vs. AGG — Risk / Return Rank
VMBS
AGG
VMBS vs. AGG - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) and iShares Core U.S. Aggregate Bond ETF (AGG). 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.
| VMBS | AGG | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | +0.21 | ||
| Sortino ratioReturn per unit of downside risk | +0.32 | ||
| Omega ratioGain probability vs. loss probability | 1.27 | 1.23 | +0.04 |
| Calmar ratioReturn relative to maximum drawdown | 2.39 | 1.76 | +0.63 |
| Martin ratioReturn relative to average drawdown | 7.63 | 5.11 | +2.52 |
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Drawdowns
VMBS vs. AGG - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, smaller than the maximum AGG drawdown of -18.43%. Use the drawdown chart below to compare losses from any high point for VMBS and AGG.
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Drawdown Indicators
| VMBS | AGG | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -18.43% | +0.96% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -2.76% | +0.08% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | -6.11% | -1.54% |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | -17.82% | +0.70% |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | -18.43% | +0.96% |
Current DrawdownCurrent decline from peak | -0.99% | -1.74% | +0.75% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -2.71% | +0.22% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.84% | 0.95% | -0.11% |
Volatility
VMBS vs. AGG - Volatility Comparison
Vanguard Mortgage-Backed Securities ETF (VMBS) has a higher volatility of 1.39% compared to iShares Core U.S. Aggregate Bond ETF (AGG) at 1.19%. This indicates that VMBS's price experiences larger fluctuations and is considered to be riskier than AGG based on this measure. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VMBS | AGG | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.39% | 1.19% | +0.20% |
Volatility (6M)Calculated over the trailing 6-month period | 3.27% | 2.83% | +0.44% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.30% | 3.80% | +0.50% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.78% | 6.09% | +0.69% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.41% | 5.41% | 0.00% |
VMBS vs. AGG - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is higher than AGG's 0.03% expense ratio. However, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
VMBS vs. AGG - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.17%, more than AGG's 3.97% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
AGG iShares Core U.S. Aggregate Bond ETF | 3.97% | 3.89% | 3.74% | 3.13% | 2.39% | 1.77% | 2.14% | 2.70% | 2.72% | 2.32% | 2.39% | 2.45% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.17% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
Frequently Asked Questions
With a correlation of 0.95, VMBS and AGG move almost identically. Holding both adds very little diversification - you're essentially doubling your position in the same market segment. Choosing one is usually more capital-efficient.
VMBS has higher volatility (1.39%) compared to AGG (1.19%). In terms of maximum drawdown, VMBS dropped -17.47% vs AGG's -18.43%.
On 10-year performance, AGG leads with 1.59% vs 1.39% for VMBS. On fees, AGG is cheaper at 0.03% per year. On volatility, AGG has been the lower-risk option at 1.19%. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 10-year period, AGG has performed better with a 1.59% return vs 1.39%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
AGG is cheaper with a 0.03% expense ratio, compared with 0.04% for VMBS.
VMBS has the higher dividend yield at 4.17%, compared with 3.97% for AGG.
VMBS is categorized as Mortgage Backed Securities, while AGG is Total Bond Market. VMBS tracks Barclays Capital U.S. MBS Index, while AGG tracks Bloomberg U.S. Aggregate Bond Index. They also come from different issuers: Vanguard and iShares. Their fees differ too: 0.04% for VMBS and 0.03% for AGG.
VMBS currently has the higher Sharpe Ratio (1.49 vs 1.28), 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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