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ETF Comparison

AGG vs LQD: Which Is the Better Pick in 2026?

A head-to-head comparison of iShares Core U.S. Aggregate Bond ETF and iShares iBoxx $ Investment Grade Corporate Bond ETF covering yield, cost, risk, and income potential.

Updated October 2, 2026

How these figures are calculated: methodology.

Best for

  • AGGInvestors who want fixed-income ballast that steadies the portfolio when stocks fall.
  • LQDInvestors who want higher current income (5.17% vs 4.25% for AGG).

Jump to the side-by-side numbers

Visual comparison

Key metrics

Projected income on $10K

Projections assume the current yield and share price remain constant. Actual results will vary.

Total returns

100% reinvested · ex-date convention. Period returns use this fixed assumption, independent of chart settings. YTD and 1Y are cumulative period returns; 3Y, 5Y, and 10Y are annualized. The shared Since-start window is annualized only when it covers at least one year.

AGG has outpaced LQD over the trailing twelve months, posting a -2.07% total return against -4.33%. The picture flips over 10 years, though — LQD has compounded at 1.74% a year, ahead of AGG at 1.12%. AGG has been the steadier holding, though — annualized volatility of 5.2% against 7.1% for LQD. Figures are total returns: price change plus every distribution reinvested.

Total return and risk statistics by fund. Each row is one fund; each column is one period or statistic.
SymbolYTD cumulative1Y cumulative3Y annualized5Y annualized10Y annualizedSince Sep 2003Volatility Sharpe Sortino Max drawdown
AGG-2.71%-2.07%4.33%-0.67%1.12%2.88%5.2%-0.05-0.07-4.8%
LQD-4.25%-4.33%5.00%-1.39%1.74%3.83%7.1%0.060.08-6.3%

Total return with all distributions reinvested on the ex-dividend date (a modeling convention, not the cash-settlement date), split-adjusted, as of October 2, 2026. YTD and 1Y are cumulative period returns; 3Y, 5Y, and 10Y are annualized. The shared Since-start window is annualized only when it covers at least one year. “Since Sep 2003” measures every fund from September 26, 2003 — the start of shared available history — so all funds share one comparison window. Volatility is the annualized standard deviation of daily total returns over the trailing 3 years. Sharpe and Sortino divide the annualized return in excess of the risk-free rate by, respectively, that volatility and the downside deviation (both over the trailing 3 years) — higher is better. Max drawdown is the largest peak-to-trough total-return decline over the same window — shallower is better.

Side-by-side snapshot

Side-by-side snapshot. Each row is one metric; each column is one fund.
MetricAGGLQD
Full nameiShares Core U.S. Aggregate Bond ETFiShares iBoxx $ Investment Grade Corporate Bond ETF
IssueriSharesiShares
Underlying indexBloomberg U.S. Aggregate Bond IndexMarkit iBoxx USD Liquid Investment Grade Index
Last Close$94.25 as of October 2, 2026$101.83 as of October 2, 2026
Distribution rate4.25%5.17%
Trailing 12-month yield4.21%4.96%
Distribution Safety Score™ 100100
Safety-Adjusted Yield 4.25%5.17%
Expense ratio0.03%0.14%
AUM$137B$27.2B
Distribution frequencyMonthlyMonthly
ObjectiveProvide exposure to the fund's underlying index or strategy per issuer materials.Provide exposure to the fund's underlying index or strategy per issuer materials.
Asset classFixed IncomeFixed Income
Inception date09/22/200307/22/2002
Beta0.991.35
Last dividend$0.33414 declared, pays 10/06/2026$0.43866 declared, pays 10/06/2026
Ex-dividend date10/01/202610/01/2026

Bottom lineChoose AGG if you want fixed-income ballast that steadies the portfolio when stocks fall. Choose LQD if you want higher current income (5.17% vs 4.25% for AGG).

Model this comparison:
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Income calculator

See how much monthly income a hypothetical investment would generate in each ETF at current yields.

iShares
ETFs466
Total AUM$4683B

ETFs and AUM reflect what Dividend Vision tracks — the issuer's full lineup may be larger.

iShares is one of the largest ETF providers globally, known for offering a broad, diversified lineup of exchange-traded funds across multiple asset classes and investment strategies. The company operates 215 funds spanning 15 distinct families, including popular offerings in dividend income, covered call strategies, bonds, equities, ESG-focused investments, and factor-based approaches, with widely-held tickers like AGG (bond), ACWI (global equity), and AOA (allocation). iShares is characterized by its comprehensive fund ecosystem that serves both core portfolio holdings and specialized investment strategies, making it a prominent player for investors seeking both traditional and alternative income-generating ETF solutions.

See our curated list of related YouTube videos on AGG and LQD.

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Quick verdict

AGG (iShares Core U.S. Aggregate Bond ETF) and LQD (iShares iBoxx $ Investment Grade Corporate Bond ETF) are both monthly-pay dividend ETFs, but they take different approaches.

LQD offers the higher yield at 5.17% vs 4.25% for AGG. A higher yield means more current income per dollar invested, though it may come with different risk characteristics.

AGG is cheaper with an expense ratio of 0.03% compared to 0.14%.

They have different reference exposures: AGG is linked to Bloomberg U.S. Aggregate Bond Index while LQD is linked to Markit iBoxx USD Liquid Investment Grade Index, which means their performance drivers differ.

AGG is the larger fund by assets ($137B), but assets alone do not establish trading costs or liquidity.

Who should choose each?

Choose AGG

iShares Core U.S. Aggregate Bond ETF

  • Want fixed-income ballast that cushions equity drawdowns.
  • Want to keep costs low — a 0.03% expense ratio vs 0.14% for LQD.
  • Prefer lower volatility — a beta of 1.0 vs 1.4 for LQD.

Choose LQD

iShares iBoxx $ Investment Grade Corporate Bond ETF

  • Want higher current income — LQD yields 5.17% vs 4.25% for AGG.
  • Want fixed-income ballast that cushions equity drawdowns.

Not sure? Use the income calculator and snapshot above to weigh these trade-offs against your own goals.

Deep dive

Yield & income

On a $10,000 investment, AGG would generate roughly $35.42 cash per distribution, while LQD would produce $43.08 cash per distribution, at current distribution rates. Both pay monthly distributions.

AGG yield4.25%
LQD yield5.17%
Cash diff on $10K$7.67

Cost & efficiency

Over 10 years on $10,000, AGG would cost approximately $30 in fees vs $140 for LQD (simplified, not compounded). The $110.00 difference may be offset by yield or performance.

AGG ER0.03%
LQD ER0.14%

Strategy & risk

AGG tracks Bloomberg U.S. Aggregate Bond Index with a bonds approach, while LQD tracks Markit iBoxx USD Liquid Investment Grade Index with a bonds approach. Beta is 0.99 for AGG and 1.35 for LQD, making AGG the less volatile of the two by this measure.

AGG beta0.99
LQD beta1.35

Fund details

AGG is managed by iShares (launched 09/22/2003) with $137B in assets. LQD is managed by iShares (launched 07/22/2002) with $27.2B in assets.

AGG AUM$137B
LQD AUM$27.2B
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Frequently asked questions

What is the current distribution rate for AGG and LQD?

AGG currently distributes 4.25% and LQD 5.17%, based on fund data updated October 2026. Distribution rate moves with both the payout and the share price, so check the as-of date before relying on either figure.

Is AGG or LQD better for dividend income?

It depends on your goals. LQD currently offers the higher distribution yield, which means more income per dollar invested. However, a lower-yield fund may offer better total return or lower volatility. Consider your time horizon and risk tolerance.

What is the difference between AGG and LQD?

AGG (iShares Core U.S. Aggregate Bond ETF) tracks Bloomberg U.S. Aggregate Bond Index with a bonds approach, while LQD (iShares iBoxx $ Investment Grade Corporate Bond ETF) tracks Markit iBoxx USD Liquid Investment Grade Index with a bonds approach. They are issued by iShares and iShares respectively.

Can I hold both AGG and LQD?

Yes — nothing prevents holding both. Whether the combination actually diversifies depends on how much the underlying exposures overlap, which isn't fully measurable from the data on this page; review each security's holdings, sector, and strategy before treating them as complementary.

Is AGG or LQD safer?

By Dividend Vision's Distribution Safety Score — a rules-based 0–100 estimate of how resilient a distribution looks, where higher is safer — they are effectively tied: AGG scores 100, LQD scores 100. Neither has a clear safety edge on that measure. AGG has also shown lower price volatility (beta 0.99 vs 1.35 for LQD). No score makes an investment risk-free — treat this as a screening signal, not a guarantee.

Which has lower fees, AGG or LQD?

AGG has an expense ratio of 0.03% while LQD charges 0.14%. Lower fees mean more of your investment returns stay in your pocket over time.

How much income does $10,000 in AGG vs LQD generate?

At current rates, $10,000 in AGG would generate roughly $35.42 cash per distribution ($425.00 annually). The same in LQD would produce about $43.08 cash per distribution ($517.00 annually).

Which has performed better historically, AGG or LQD?

AGG has outpaced LQD over the trailing twelve months, posting a -2.07% total return against -4.33%. The picture flips over 10 years, though — LQD has compounded at 1.74% a year, ahead of AGG at 1.12%. AGG has been the steadier holding, though — annualized volatility of 5.2% against 7.1% for LQD. Figures are total returns: price change plus every distribution reinvested. Past performance does not guarantee future results.

More comparisons to explore

AGG vs LQD — at a glance

Generated October 3, 2026.

Overview

AGG and LQD are both iShares bond ETFs offering monthly income, but they cover different universes within investment-grade debt. AGG tracks the broad U.S. Aggregate Bond Index—a mix of government, corporate, mortgage-backed, and asset-backed securities. LQD zeros in on the investment-grade corporate bond market alone, filtering out government and securitized debt. That focus on corporate credit is what drives the 5.17% yield on LQD versus 4.25% on AGG.

How they differ

The biggest structural difference is scope: AGG holds the entire U.S. investment-grade bond market (government, agency, corporate, MBS, ABS), while LQD holds only IG corporate bonds. Because corporates carry higher credit risk than Treasuries and agencies, LQD's yield sits 0.92% percentage points higher.

AGG's 0.03% expense ratio undercuts LQD's 0.14% by a slim margin, reflecting AGG's massive $137B asset base against LQD's $27.2B. On volatility, LQD's 1.35 beta signals roughly 35% more price swing than AGG's 0.99 beta—a natural consequence of corporate credit sensitivity. Both distribute monthly, so reinvestment rhythm is identical.

Who each is best for

AGG: Fits investors seeking broad-based, government-stabilized bond exposure with minimal turnover costs. The mix of Treasuries, agencies, and corporates appeals to those building a core fixed-income anchor.

LQD: Fits investors willing to take on corporate credit sensitivity in exchange for higher current income, and those who want isolated exposure to investment-grade corporate debt without government securities dragging down yield.

Key risks to know

  • Credit spread risk on LQD. IG corporate spreads widen in recession or credit stress, eroding bond prices and distributions. AGG's Treasury and agency holdings provide a cushion; LQD has none.
  • Duration mismatch between the funds. LQD's corporate bond mix typically carries different maturity and duration profiles than AGG's broader index, so they won't move in tandem during rate cycles.
  • AGG's mortgage-backed security exposure. Prepayment risk in MBS can suppress returns in falling-rate environments, a headwind LQD avoids by holding only corporates.
  • Reinvestment risk at current yields. Both funds distribute monthly at rates (4.25%, 5.17%) above the current risk-free rate; near-term reinvestment of those payouts may occur at lower yields if rates decline.

Bottom line

If you want a diversified, government-backed bond foundation with minimal fees, AGG stands out. If you're comfortable with corporate credit exposure and want higher income, LQD's 0.92% yield premium warrants weighing against its 1.35 beta and concentration risk. Past performance doesn't predict future results; credit conditions and rate paths will shape both funds differently over time.

AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.

Learn the method

The metrics behind this comparison, explained in the Academy.

Bond fund basics How to read a fund's stats Why total return beats chasing yield

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These comparisons follow the Dividend Vision methodology.