ETF v praxi
AGGH — iShares Global Aggregate Bond: a breakdown of a bond ETF for portfolio stabilisation
Key takeaways
- AGGH tracks the Bloomberg Global Aggregate Bond Index — over 10,000 bonds from around the world in one ETF.
- EUR hedging eliminates currency risk for European investors but adds small hedging costs.
- TER of around 0.10% per year places AGGH among cost-efficient bond ETFs — verify on justETF.
- Primary portfolio role: reducing volatility, diversification against equities and a rebalancing tool.
- Interest rate risk is real — when rates rise, bond prices fall; regularly monitor duration.
What is AGGH and what you are buying
AGGH (iShares Core Global Aggregate Bond UCITS ETF EUR Hedged) tracks the Bloomberg Global Aggregate Bond index — one of the broadest bond indices in the world. It includes government bonds, investment-grade corporate bonds and asset-backed securities from more than 70 countries. The total number of positions exceeds 10,000 — this is genuinely global bond diversification.
The key feature: EUR hedging
AGGH has "EUR Hedged" in its name — the fund hedges currency risk into euros. Because a large share of bonds is denominated in USD and other currencies, without hedging returns would move with the exchange rate. EUR hedging eliminates this, but adds modest extra costs. For European investors this is generally the right choice in bonds.
TER and technical parameters
The TER is approximately 0.10% per year — verify the current figure on justETF. The fund is accumulating (Acc) domiciled in Ireland. Duration (sensitivity to interest rate changes) and average yield to maturity should always be checked on justETF or directly at iShares — these figures change.
Stabilising role in the portfolio
Why bonds at all?
- They reduce overall portfolio volatility during equity drawdowns.
- They provide regular income (reinvested in the accumulating version).
- They enable rebalancing — when equities fall, you sell bonds and buy equities more cheaply.
AGGH is suitable for investors who:
- have a more conservative profile or are approaching the drawdown phase,
- want to reduce the volatility of their equity core,
- seek cost-efficient bond exposure without having to select individual bonds.
Risks of a bond ETF
Bonds are not without risk: interest rate risk (when rates rise, bond prices fall) and credit risk (an issuer may default) are key factors. AGGH holds exclusively investment-grade bonds, so credit risk is relatively low — but interest rate risk at longer durations can be significant. More on the role of bonds and gold in a portfolio is available in the breakdown of SGLN (physical gold). How to assess risk in general is explained in what is risk and how to measure it.
FAQ
What does "EUR Hedged" in the AGGH name mean?
The fund hedges the currency risks arising from holding non-euro bonds back into EUR. It eliminates exchange rate fluctuations so the return reflects the return of the underlying bonds, not currency movements.
Is AGGH suitable for a young investor with a long horizon?
It depends on the profile. Young investors with a 30-year horizon typically choose a higher equity allocation and a lower bond allocation. AGGH can be part of their portfolio too, but typically in a smaller allocation.
How does AGGH react when equities fall?
Historically bonds tended to hold their value or rise during significant equity declines. But this correlation is not guaranteed — in 2022 both equities and bonds fell simultaneously due to inflation and rapid rate rises.