AGG vs PFM Fund Comparison

A comparison between AGG and PFM based on their expense ratio, growth, holdings and how well they match their benchmark performance.

Group Created with Sketch.

Minafi's Take on AGG vs PFM

Here's an in depth look at the differences between iShares Core U.S. Aggregate Bond ETF ($AGG) and Invesco Dividend Achievers ETF ($PFM).

To start off, here's a look at the basics of each fund. Keep an eye on the FI Score. That's a custom score from 0 to 100 that we generate based on how good this fund is for the casual investor. Most investors only need a handful of total funds in their portfolio. The higher the score, the more likely this is one of those few. Score alone isn't enough! Keep reading on to see how different (or perhaps similar) these two funds are.

98% FI Score
  • agg
  • ETF
  • Bond
  • Total US Bond Market

iShares Core U.S. Aggregate Bond ETF

Expenses: 0.04% (Better than 1% of similar funds)

This is a great choice for a Total US Bond Market Bond fund. See why »

52% FI Score
  • pfm
  • ETF
  • US Stocks
  • Large Value

Invesco Dividend Achievers ETF

Expenses: 0.54% (Better than 1% of similar funds)

This is an OK choice for a Large Value US Stocks fund. See why »

Both $AGG and $PFM are categorized as ETFs. ETFs have an added bonus over mutual funds of being more widely available. Mutual funds are often limited to only the issuing investment brokerage. Since these are both ETFs, you may be able to find these at a wider number of investment apps and websites.

The biggest disadvantage of ETFs is that some platforms only allow you to purchase ETFs in whole shares. So if an ETF is going for $75, you may need to invest in increments of $75. Most 401(k)'s allow for investing down to the penny, but you'll want to verify your platform allows for "fractional ETF Shares".

To learn more about the difference between these two, you can read about the difference between ETFs and Mutual Funds.

When evaluating a fund, the first things I look at are:

  • What it invests in
  • How much it charges in fees
  • How large the fund is

Let's look into these criteria one by one and see if either of these funds stands out.

Fund Holdings Comparison

Minafi's FI Score algorithm takes into account the category and market. The more niche a fund is, the lower the score. This doesn't mean it's a worse fund, but it does mean you should stop and make sure this a fund you need to diversify your portfolio.

AGG PFM
Market Score 9.8 /10 4.1 /10
Category Score 10.0 /10 8.0 /10
Total 19.8 12.1

A score of 10 means this is a solid market and category that almost every investor will want to have investments in. The lower the score, the more specific the investment. These scores are based on when most investors would add these funds to their portfolio. A score of 10 means that this fund (or one like it) belongs in a three-fund portfolio. The lower the score, the farther down in your portfolio a fund would go.

Winner: $AGG

Fee Comparison

Fees are one of the biggest killers of portfolio growth. The difference between a 2% fee and a 0.04% fee over 30 years can result in your portfolio having half the total value!

If you're just getting started investing and learning how fees impact your portfolio, I'd encourage you to read through my free investment course (specifically '2.2 - All About Fees') where I go over all the different types of fees you can be charged and how to lower them.

For these two funds, AGG has an expense ratio of 0.04% while PFM has an expense ratio of 0.54%. In this case, both of these funds have a similar fee.

Winner: $AGG (barely)

Fund Size Comparison

One place these two funds differ is in their total assets under management. This is a good indication of how many other investors trust this fund. A large fund by itself doesn't mean it's a good fund, but it is one thing to consider when figuring out how to choose the right fund.

In the case of these two funds, AGG is a large fund with 72.6 Billion in assets under management. PFM, on the other hand, is a small fund with 325 Million in assets under management.

Winner: $AGG, iShares Core U.S. Aggregate Bond ETF

Which Should You Choose? AGG or PFM?

Comparing these two funds isn't an apples to apples comparison. AGG is a Bond Total US Bond Market fund, while PFM is a US Stocks Large Value fund.

If you're aiming to build a diversified, low-fee, tax-optimized portfolio you likely won't be choosing between these two funds since they're different enough.

Running both of these funds through Minafi's FI Score algorithm, gives AGG a score of 98 and PFM a score of 52.

Winner: $AGG, iShares Core U.S. Aggregate Bond ETF

$AGG

iShares Core U.S. Aggregate Bond ETF

98

Read More
Ratings
Rating Type Rating
Expense Ratio Score 10 /10
Expense Rating 10 /10
Market Score 10 /10
Category Score 10 /10
Overview
Overview Details
Fund Type ETF
Inception Date Jul-1-2010
Exchange NYSE ARCA
Expense Ratio 0.040%
Net Assets 72.6 Billion
Yield 2.51%
Holdings
Description Info
Market Bond
Category Total US Bond Market
Sectors
  • Basic Materials 0.00%
  • Communication Services 0.00%
  • Consumer Cyclicals 0.00%
  • Consumer Defensive 0.00%
  • Energy 0.00%
  • Financial Services 0.00%
  • Healthcare 0.00%
  • Industrials 0.00%
  • Real Estate 0.00%
  • Technology 0.00%
  • Utilities 0.00%

$PFM

Invesco Dividend Achievers ETF

52

Read More
Ratings
Rating Type Rating
Diversification Score 3 /10
Expense Ratio Score 8 /10
Expense Rating 5 /10
Market Score 4 /10
Category Score 8 /10
Overview
Overview Details
Fund Type ETF
Inception Date Sep-15-2005
Exchange NASDAQ
Expense Ratio 0.540%
Net Assets 325 Million
Yield 2.31%
Holdings
Description Info
Market US Stocks
Category Large Value
Sectors
  • Basic Materials 3.00%
  • Communication Services 6.65%
  • Consumer Cyclicals 8.02%
  • Consumer Defensive 18.09%
  • Energy 4.68%
  • Financial Services 10.21%
  • Healthcare 13.51%
  • Industrials 14.30%
  • Real Estate 1.72%
  • Technology 12.69%
  • Utilities 7.14%
Regions
  • Europe Developed 0.57%
  • Latin America 0.12%
  • North America 99.31%

Adam says: Learn how to confidently invest for retirement!

Join the Minafi Investor Bootcamp to see how.

This 10-course bootcamp starts at only $10 for everything!

Minafi - The intersection of FI, minimalism & mindfulness.

Don't miss out on new posts, courses, interactive articles and more!

Join & Get Your First Course Free

© 2024   Adam Fortuna

Site Map
Triangle Graduation Cap Angle Down Book regular Phone laptop regular fire regular fire regular search regular Acorn duotone Seedling duotone thumbs up duo thumbs down duo