AGG DCA Backtest
If you'd invested $700 every month, how long to $1M?
AGG (iShares Core U.S. Aggregate Bond ETF) spreads your money broadly across the entire U.S. bond market. iShares (BlackRock) launched it in 2003, and it holds thousands of investment-grade bonds — U.S. Treasuries, government-agency bonds, corporate bonds, and mortgage-backed securities (MBS). Where TLT concentrates only in ultra-long-term Treasuries, AGG is closer to a 'bond-market index fund,' mixing maturities and bond types evenly.
Even over the full period, that's about $257.49K today · invested $192.5K · annualized +3%
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A 'core' asset that covers the whole bond market
The Bloomberg U.S. Aggregate Bond Index that AGG tracks spans a wide range of investment-grade bonds issued in the U.S. — Treasuries, corporate bonds, government-agency debt, and mortgage-backed securities. Maturities range from short to long, so it's not concentrated in any single maturity or type of issuer.
Because of that broad composition, AGG is often called a portfolio's 'core' bond holding. Instead of picking individual bonds one by one, a single position in AGG gives you diversified exposure across the entire U.S. bond market.
Why it swings less than TLT — shorter average maturity
The average maturity (more precisely, duration) of the bonds in AGG is much shorter than TLT's 20-plus years. As explained earlier, longer maturities react more sharply to rate changes, so AGG — which mixes in shorter-maturity bonds too — tends to move less than TLT does when rates rise or fall.
That doesn't mean its price never moves, though. During periods of rapid rate change, AGG moves too, and it's had unusually large drawdowns for a bond fund during periods when rates rose sharply. Still, the magnitude has generally been milder than TLT's.
Its role alongside stocks
AGG is commonly held alongside stock assets like SPY or QQQ to lower a portfolio's overall volatility — the idea being that when stocks swing hard, bonds move less, or in the opposite direction, and act as a cushion.
But just like TLT, that cushioning effect can weaken during periods when rates need to rise quickly to fight inflation, since stocks and bonds can fall together. Rather than assuming 'holding bonds means you're automatically safe,' it's worth remembering that the size of the diversification benefit can vary with conditions.
Taxes and what this means for the calculator
AGG is also a U.S.-listed ETF, and how capital gains and interest distributions are taxed depends entirely on your country of residence — this isn't tax advice, so check with a local tax professional. This site's results are pre-tax, computed on an interest-reinvested adjusted-close basis.
Bond assets generally carry lower long-term expected returns than stocks, so accumulating in AGG alone toward a big long-term goal will typically take much longer than it would with stock assets like SPY or QQQ. You can see this difference directly by comparing tickers side by side in the calculator above. This article is for information, not investment advice.
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This content is for informational purposes and is not investment advice or a recommendation. You are solely responsible for your investment decisions.