AGG Profile
The iShares Core U.S. Aggregate Bond ETF is a passively managed exchange-traded fund (ETF) that aims to replicate the performance of the total U.S. investment-grade bond market. The fund achieves this by investing at least 80% of its assets in the component securities of its underlying index, which includes a wide array of U.S. investment-grade bonds, such as Treasuries, government-related bonds, corporate bonds, mortgage-backed securities, and asset-backed securities. By tracking this broad index, the ETF offers diversified exposure to the U.S. fixed income market, making it a core holding for investors seeking stability and income.
To ensure that the fund closely mirrors the performance of its underlying index, it invests at least 90% of its assets in fixed income securities that are of the same type as those included in the index. This includes not only the direct holdings of the bonds but also To-Be-Announced (TBA) securities, which are forward-settling contracts for mortgage-backed securities. The use of TBAs allows the fund to maintain liquidity and manage its exposure to mortgage-backed securities effectively, helping to ensure that the fund tracks its index closely and delivers consistent returns.
The iShares Core U.S. Aggregate Bond ETF is designed to be a low-cost, tax-efficient investment vehicle that provides broad exposure to the investment-grade bond market. This ETF is often utilized by investors as a foundational component of a well-diversified portfolio, offering income generation, capital preservation, and a hedge against equity market volatility. The fund's extensive diversification across thousands of bonds helps mitigate risk and provides a stable income stream, making it an attractive option for conservative investors or those nearing retirement.
Given its focus on investment-grade bonds, the iShares Core U.S. Aggregate Bond ETF is suitable for investors looking to balance their portfolios with fixed-income securities. The fund's adherence to a comprehensive index of U.S. bonds ensures that investors gain exposure to a broad range of sectors and issuers, providing a reliable source of income while also offering potential capital appreciation in a low-interest-rate environment. This makes it a key tool for managing risk and maintaining portfolio stability over the long term.
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