This is a passive ETF that tracks the Bloomberg US Agency Bond Index, which is composed of investment-grade, dollar-denominated bonds issued by US government agencies. It diversifies across agency bonds whose credit quality is close to that of Treasuries.

It suits conservative bond investors who want Treasury-like credit quality and stable interest income, and who prefer relatively short maturities.

The ETF is managed by iShares using a passive (index-tracking) approach.

The fund tracks an index of investment-grade bonds issued by US government agencies such as Fannie Mae, Freddie Mac and the Federal Deposit Insurance Corporation. Backed by the credit of government agencies, it maintains high credit quality close to that of Treasuries, and its relatively short average maturity gives it a moderate level of sensitivity to interest rate changes.

• High credit quality of government agency bonds
• A modest yield pickup over Treasuries

Assets under management (AUM) stand at $648.4M, and the total expense ratio is 0.15% per year.

Compared with similar government-related bond ETFs such as MBB and VMBS, the main points of comparison are asset mix and credit and maturity characteristics.

Agency bond ETFs are driven by the direction of interest rates: bond prices generally come under pressure when rates rise and strengthen when rates fall. With Treasury-like credit quality and intermediate maturities, the fund tends to be less volatile than corporate bonds.

Flows into government-related bonds shift with safe-haven demand and the interest rate cycle, and money sometimes moves in as a Treasury alternative when market uncertainty rises. Demand from investors seeking a slight yield pickup over Treasuries is also worth watching.

High credit quality close to that of Treasuries is its strength, while limited extra yield and interest rate sensitivity are factors to consider.

For purer Treasury exposure, alternatives include GOVT and IEI, which hold only US Treasuries and therefore have a simpler credit profile. For similar intermediate-term Treasury exposure, products such as VGIT are also worth comparing. The three products shown in the table, MBB, VMBS and SPMB, hold mortgage-backed securities guaranteed by government agencies, so they are government-related bonds but differ in the nature of their assets. This ETF's differentiating factor is its focus on bonds issued by government agencies.

Here are the points to review before investing in AGZ. High credit quality is attractive, but interest rate sensitivity, the level of extra yield and the asset mix should be confirmed in advance. It is also a good idea to compare it with Treasury and mortgage bond products.

Rising interest rates and policy changes related to government agencies are the main variables for short-term performance, and because the fund prioritizes high credit quality, additional yield is limited. As a Treasury alternative, it is not suited to aggressive capital growth.

It is a suitable candidate for conservative investors who want Treasury-like credit quality and a slight yield pickup. If you want simpler Treasury exposure, consider products such as GOVT and IEI, and if you want concentrated exposure to government agency bonds, compare this product alongside them before choosing.