Bond ETFs: Your Tax Bracket Decides the Winner Between AGG and MUB

• AGG carries a somewhat little disbursal ratio and offers a higher output than MUB.

• AGG has seen stronger 1-year returns but experienced a deeper five-year drawdown.

• Both funds people antithetic marketplace segments, with AGG covering the full U.S. investment-grade enslaved marketplace and MUB focusing connected municipal bonds.

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The iShares National Muni Bond ETF (NYSEMKT:MUB) and the iShares Core US Aggregate Bond ETF (NYSEMKT:AGG) disagree astir successful marketplace exposure, with AGG’s broader U.S. investment-grade enslaved coverage, a deeper humanities drawdown, and a modestly higher yield, portion some support debased costs and precocious liquidity.

This examination pits 2 fashionable iShares enslaved ETFs against each other: MUB, which targets investment-grade U.S. municipal bonds, and AGG, which tracks the U.S. investment-grade enslaved universe. Both entreaty to investors seeking halfway fixed income exposure, but their risk, yield, and portfolio constitution diverge successful meaningful ways.

The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

AGG looks a spot much affordable with a little disbursal ratio and presently delivers a higher payout, offering a 0.8 percent constituent output vantage implicit MUB.

AGG invests crossed the full U.S. investment-grade enslaved market, holding 13,015 positions. The portfolio is wholly successful currency and equivalents. With implicit 2 decades of history, AGG aims to correspond the broadest imaginable portion of the U.S. enslaved market, making it a halfway holding for galore fixed income investors.

MUB, by contrast, focuses exclusively connected U.S. municipal bonds, with 6,098 holdings. Its portfolio is besides presently 100% currency and equivalents. MUB’s narrower muni absorption whitethorn entreaty to those seeking tax-advantaged income oregon little correlation with taxable bonds.

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Bond ETFs service arsenic the stableness anchor successful astir portfolios, generating dependable income portion stocks bounce around. Unlike banal ETFs that bargain institution shares, enslaved ETFs clasp debt—essentially IOUs from governments oregon corporations that wage regular interest. AGG and MUB correspond 2 fundamentally antithetic approaches to that income, and the close prime depends wholly connected your taxation bracket.