AGG vs BND vs AGGU for UAE residents
AGG and BND both hold the broad US investment grade bond market. AGGU holds bonds from around the world, hedged to US dollars, so it is a global alternative rather than the same fund in Irish form. For an investor living in the UAE the differences that matter are what they hold, cost, domicile and how US tax treats each one.
The funds side by side
| ETF | Domicile | Index | Dividends | Expense ratio | Listing | Launched |
|---|---|---|---|---|---|---|
| AGG iShares Core U.S. Aggregate Bond ETF | United States | Bloomberg US Aggregate | Paid out monthly | 0.03% a year | NYSE Arca, US dollars | 2003 |
| BND Vanguard Total Bond Market ETF | United States | Bloomberg US Aggregate Float Adjusted | Paid out monthly | 0.03% a year | Nasdaq, US dollars | 2007 |
| AGGU iShares Core Global Aggregate Bond UCITS ETF (USD Hedged, Acc) | Ireland (UCITS) | Bloomberg Global Aggregate (US dollar hedged) | Reinvested (accumulating) | 0.10% a year | London, US dollars | 2017 |
Expense ratios as reported by our market data, 1 Oct 2026.
Returns in US dollars
| ETF | 1 year | 3 years (annualised) | 5 years (annualised) | 10 years (annualised) | Volatility 3Y |
|---|---|---|---|---|---|
| AGG | -2.06% | +4.45% | -0.54% | +1.15% | 5.20% |
| BND | -2.04% | +4.44% | -0.54% | +1.10% | 5.09% |
| AGGU | -1.21% | +4.19% | +0.11% | N/A | 4.07% |
Total returns with dividends reinvested, to 1 Oct 2026. Returns over 3 years and longer are compounded annual returns. Past performance does not indicate future returns.
What differs for an investor living in the UAE
- US estate tax. Shares of a US bond ETF count as US assets, even though the fund holds US government bonds; a Treasury bond held directly generally would not. For a person who is not a US citizen or resident, US estate tax can apply above US$60,000 of US assets, at rates that rise to 40%. The Irish UCITS funds are shares of an Irish company and are generally not treated as US assets.
- Tax on the income. Income a US bond fund reports as interest-related dividends is exempt from the 30% US withholding for an investor outside the US who has given a W-8BEN form. iShares reports TLT's 2026 payouts as 100% qualifying and AGG's as about 93%. Whether the exemption is applied depends on the fund's reporting and on your broker: some withhold first, and getting it back means filing a US tax return.
- Paid out or reinvested. The US funds pay income every month. The accumulating Irish funds reinvest it inside the fund, so nothing reaches your account until you sell.
- Cost. Compare the expense ratios above; on funds holding similar bonds, a lower yearly cost is the most certain difference in what you keep.
The outcome depends on your nationality, residence and facts, so confirm your own position with a tax adviser. Sources: 26 USC 871(k), interest-related dividends; IRS Publication 515; iShares 2026 qualified interest income memo; IRS, nonresidents with US assets, checked October 2026.
Questions
Are AGG, BND and AGGU the same?
AGG and BND are close: both track the US investment grade bond market and cost 0.03% a year. AGGU tracks a global bond index hedged to US dollars, so its returns differ for that reason as well as cost.
Is income from AGG or BND taxed for a UAE resident?
Income these funds report as interest-related dividends is exempt from the 30% US withholding for a non-US investor with a W-8BEN form on file; iShares reports about 93% of AGG's 2026 payouts as qualifying. Whether your broker applies the exemption varies, so ask before you buy and confirm your position with a tax adviser.
What does US dollar hedged mean?
The fund holds bonds in many currencies and uses currency contracts to remove most of the effect of those currencies moving against the US dollar.