Bloomberg Aggregate Bond Index

What Is the Bloomberg Aggregate Bond Index?

The Bloomberg Aggregate Bond Index or "the Agg" is a broad-based fixed-income index utilized by bond traders and the managers of mutual funds and exchange-traded funds (ETFs) as a benchmark to measure their relative performance.

The Agg is to the bond market what the Wilshire 5000 Total Stock Index is to the equity market.

The index has been known as the Bloomberg Agg just since August 2021. It was for a long time the Barclays Agg. Bloomberg purchased Barclays fixed-income indexes in 2016 and, for the accompanying five years, named them as Bloomberg Barclays indices. All presently carry just the Bloomberg name.

Understanding the Bloomberg Aggregate Bond Index

The Bloomberg Aggregate Bond Index is widely considered to be one of the most incredible total bond market indices.

The index incorporates government Treasury securities, corporate bonds, mortgage-backed securities (MBS), asset-backed securities (ABS), and munis to reproduce the universe of bonds in the market. It tracks bonds that are of investment-grade quality or better.

The Agg's history can be followed to before indices established by the Kuhn, Loeb and Co. investment bank in 1973. The investment bank made two indices — one that followed U.S. government bonds and a second that followed corporate bonds.

Composition of the Bloomberg Aggregate Bond Index

The composition of the Agg index is intended to address the full scope of investment-grade bonds traded in the U.S. It is composed of in excess of 10,000 issues. U.S. Treasuries address almost 40% of the index. The excess components address the debt of major industries including real estate, industrial companies, financial institutions, and utilities.

An ETF tied to the Agg will closely mirror this distribution. For instance, the iShares AGG ETF holds around 10,000 securities. The composition of the ETF incorporates (as of Jan. 22, 2022) 39.17% tied to U.S. Treasuries, 10.91% Federal National Mortgage Association, 5.65% Government National Mortgage Association, 5.36% Uniform MBS, and 4.5% Federal Home Loan Mortgage Corporation. The remainder, each making up under 1%, is in bonds issued by the Federal Home Loan Mortgage Corporation Gold, Bank of America, JPMorgan Chase, Morgan Stanley, and Goldman Sachs.

Funds and ETFs That Track the Agg

Financial backers hoping to gain maximum exposure to the fixed income market can purchase an ETF or a mutual fund that tracks the index.

The biggest bond ETF is the iShares Core U.S. Aggregate Bond ETF, which has net assets of more than $90 billion as of Jan. 22, 2022.

The Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), with $316.2 billion in assets as of Jan. 22, 2022, among the biggest bond mutual funds in the world, tracks the performance of the Bloomberg U.S. Aggregate Float Adjusted Index.

The Vanguard Total Bond Market Index Fund has 65.4% of its funds invested in U.S. Government debt, 3.7% in AAA-evaluated debt, 3.2% in AA debt, 12.1% in A debt, and 15.5% in BBB debt.

Features

• The Bloomberg Aggregate Bond Index broadly tracks the performance of the U.S. investment-grade bond market.
• The iShares Core U.S. Aggregate Bond ETF (AGG) is one of the exchange-traded funds (ETFs) that track the index.
• The index is composed of investment-grade government and corporate bonds.