AGGH: Investment Grade Exposure With Credit Hedging

2025-06-04 11:32:53 ET

Summary

• AGGH offers a unique blend of passive aggregate bond exposure and active credit hedging, aiming to reduce drawdowns during credit stress.
• The ETF closely tracks the Bloomberg US Aggregate Bond Index, with slight outperformance at credit market peaks due to its hedging overlay.
• Current stable investment grade spreads and a neutral Fed outlook favor AGGH's ability to capture appreciation with minimal hedging costs.
• Given ongoing fixed income volatility and macro uncertainty, I recommend holding AGGH if owned, but do not advise new purchases now.

Introduction

The Simplify Aggregate Bond ETF ( AGGH ) emerges as one of the most innovative solutions in recent times within the fixed income universe. Launched in February 2022 by Simplify, the vehicle not only passively replicates the aggregate investment grade bond market (through its position in the iShares Core U.S. Aggregate Bond ETF, AGG), but also incorporates an active credit hedging overlay....

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