🤝 BFF Take
IAGG Edges on Cost — BNDX Wins on AUM and Track Record
BNDX (Vanguard Total International Bond ETF) and IAGG (iShares Core International Aggregate Bond ETF) are the two leading international bond ETFs for US investors. Both are currency-hedged back to USD — meaning you're getting the bond returns without the foreign exchange volatility. BNDX tracks the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index with ~6,500 bonds at 0.07%; IAGG tracks a similar Bloomberg ex-US index with ~5,700 bonds at 0.06%. BNDX is significantly larger ($65B vs $6B), giving it superior liquidity. The 1 basis point fee difference is negligible. For investors building a global bond portfolio, either works well — BNDX is the dominant standard.
📋 Quick Takeaways
🌍Both hold international government and corporate bonds hedged to USD — removing currency risk from your bond allocation
💰IAGG costs 0.06% vs BNDX's 0.07% — one basis point difference, essentially identical fees
🏦BNDX has $65B AUM vs IAGG's $6B — BNDX is dramatically more liquid and widely held
📊 Data-Based Take: BNDX has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
BNDX
Vanguard Total International Bond ETF
IAGG
iShares Core International Aggregate Bond ETF
📋 BNDX vs IAGG — Key Facts Side by Side
| Metric |
BNDX |
IAGG |
| Fund Name |
Vanguard Total International Bond ETF |
iShares Core International Aggregate Bond ETF |
| Issuer |
Vanguard |
iShares |
| Tracks Index |
Bloomberg Global Aggregate ex-USD |
Bloomberg Global Aggregate ex-USD |
| Expense Ratio |
0.07% |
0.06% ✓ |
| Cost per $10K/yr |
$7.00 |
$6.00 |
| AUM |
$65B |
$6B |
| Holdings |
6,500 |
5,700 |
| Inception |
2013 |
2015 |
| 1-Year Return |
+4.80% |
+4.70% |
| 3-Year Return |
+0.40% |
+0.30% |
| 5-Year Return |
+1.20% |
+1.10% |
| Avg Bid-Ask Spread |
0.01% |
0.02% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 BNDX vs IAGG — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy BNDX or IAGG?
Choose if...
BNDX
- You want income and stability with lower portfolio volatility
- You already use Vanguard and prefer staying within their fund family
Choose if...
IAGG
- You want the lowest fees — saves ~$1/yr per $10K vs BNDX
- You want income and stability with lower portfolio volatility
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❓ BNDX vs IAGG — Frequently Asked Questions
What does it mean that BNDX and IAGG are currency-hedged?
Currency hedging means the fund uses financial contracts (typically forward currency agreements) to neutralize the impact of foreign exchange rate movements. When you own foreign bonds, your return depends on both the bond's performance AND the local currency's movement vs the dollar. Hedging removes the currency component, so you receive returns driven purely by bond performance. This makes hedged international bonds more predictable but slightly reduces potential returns in periods when foreign currencies strengthen vs the dollar.
Should I add international bonds to my portfolio?
International bonds add diversification beyond US bonds but have historically provided modest returns, especially hedged. The case for inclusion: global diversification, exposure to non-US interest rate cycles, and completing the "global market portfolio" alongside international stocks. The case against: hedging costs eat into yields, international bond markets have lower returns than US equities over time, and the diversification benefit has been modest. In a standard three-fund portfolio, international bonds are optional — many investors skip them.
What countries are in BNDX and IAGG?
Both hold bonds from developed international markets primarily — Japan (~20%), Germany (~10%), France (~8%), UK (~6%), Italy (~6%), and many others. They also include some emerging market sovereign bonds. The portfolios are dominated by government and quasi-government bonds with high credit quality, making them relatively conservative fixed-income allocations.
How have BNDX and IAGG performed recently?
International bond ETFs had a difficult 2022-2023 period as global central banks raised rates, reducing bond prices. However, since both funds are hedged to USD, much of the currency volatility was removed. Returns have been modestly positive but below what US investors earned in equities. The hedging cost (which varies with interest rate differentials) has been a meaningful drag in recent years as US rates rose significantly above international rates.
Is BND or BNDX better for a bond allocation?
BND (Vanguard Total Bond Market, US bonds only) and BNDX (international bonds) serve different purposes. BND focuses on US investment-grade bonds at a very low 0.03% fee. BNDX adds international diversification at 0.07%. Many investors hold both for global bond coverage, often in a ratio matching global bond market weights. If you can only hold one, BND is the simpler, lower-cost choice for US investors.
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📄 BNDX & IAGG Fact Sheets
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.