The iShares MSCI Emerging Markets ETF (EEM) and the JPMorgan Ultra-Short Income ETF (JPST) are both among the Top 100 ETFs. EEM is a iShares Diversified Emerging Mkts fund and JPST is a JPMorgan Ultrashort Bond fund. So, what’s the difference between EEM and JPST? And which fund is better?
The expense ratio of EEM is 0.50 percentage points higher than JPST’s (0.68% vs. 0.18%). EEM also has a high exposure to the technology sector while JPST is mostly comprised of A bonds. Overall, EEM has provided higher returns than JPST over the past ten years.
In this article, we’ll compare EEM vs. JPST. We’ll look at annual returns and holdings, as well as at their portfolio growth and risk metrics. Moreover, I’ll also discuss EEM’s and JPST’s industry exposure, performance, and fund composition and examine how these affect their overall returns.
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Summary
| EEM | JPST | |
| Name | iShares MSCI Emerging Markets ETF | JPMorgan Ultra-Short Income ETF |
| Category | Diversified Emerging Mkts | Ultrashort Bond |
| Issuer | iShares | JPMorgan |
| AUM | 30.33B | 17.32B |
| Avg. Return | 5.47% | 2.57% |
| Div. Yield | 1.48% | 0.94% |
| Expense Ratio | 0.68% | 0.18% |
The iShares MSCI Emerging Markets ETF (EEM) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 30.33B total assets under management and has yielded an average annual return of 5.47% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.68%.
The JPMorgan Ultra-Short Income ETF (JPST) is a Ultrashort Bond fund that is issued by JPMorgan. It currently has 17.32B total assets under management and has yielded an average annual return of 2.57% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.18%.
EEM’s dividend yield is 0.54% higher than that of JPST (1.48% vs. 0.94%). Also, EEM yielded on average 2.90% more per year over the past decade (5.47% vs. 2.57%). The expense ratio of EEM is 0.50 percentage points higher than JPST’s (0.68% vs. 0.18%).
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Fund Composition
Holdings
| EEM Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 6.36% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.58% |
| Tencent Holdings Ltd | 4.41% |
| Samsung Electronics Co Ltd | 4.05% |
| Meituan | 1.24% |
| Vale SA | 1.04% |
| Naspers Ltd Class N | 1.04% |
| Reliance Industries Ltd Shs Dematerialised | 0.97% |
| Infosys Ltd | 0.92% |
| China Construction Bank Corp Class H | 0.83% |
EEM’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Alibaba Group Holding Ltd Ordinary Shares, Tencent Holdings Ltd, Samsung Electronics Co Ltd, and Meituan at 6.36%, 4.58%, 4.41%, 4.05%, and 1.24%.
Vale SA (1.04%), Naspers Ltd Class N (1.04%), and Reliance Industries Ltd Shs Dematerialised (0.97%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the EEM’s holdings at 0.92% and 0.83%.
| JPST Bond Sectors | Weight |
| A | 39.21% |
| BBB | 36.75% |
| AAA | 14.9% |
| AA | 9.14% |
| Others | 0.0% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
JPST’s Top Bond Sectors are ratings of A, BBB, AAA, AA, and Others at 39.21%, 36.75%, 14.9%, 9.14%, and 0.0%. The fund is less weighted towards Below B (0.0%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| EEM | JPST | |
| Mean Return | 0.38 | 0 |
| R-squared | 83.5 | 0 |
| Std. Deviation | 17.79 | 0 |
| Alpha | -2.33 | 0 |
| Beta | 1.08 | 0 |
| Sharpe Ratio | 0.22 | 0 |
| Treynor Ratio | 2.22 | 0 |
The iShares MSCI Emerging Markets ETF (EEM) has a Mean Return of 0.38 with a R-squared of 83.5 and a Treynor Ratio of 2.22. Its Alpha is -2.33 while EEM’s Standard Deviation is 17.79. Furthermore, the fund has a Beta of 1.08 and a Sharpe Ratio of 0.22.
The JPMorgan Ultra-Short Income ETF (JPST) has a R-squared of 0 with a Mean Return of 0 and a Standard Deviation of 0. Its Alpha is 0 while JPST’s Sharpe Ratio is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
EEM’s Mean Return is 0.38 points higher than that of JPST and its R-squared is 83.50 points higher. With a Standard Deviation of 17.79, EEM is slightly more volatile than JPST. The Alpha and Beta of EEM are 2.33 points lower and 1.08 points higher than JPST’s Alpha and Beta.
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Performance
Annual Returns
| Year | EEM | JPST |
| 2020 | 17.56% | 2.17% |
| 2019 | 17.67% | 3.36% |
| 2018 | -14.98% | 2.19% |
| 2017 | 36.42% | 0.0% |
| 2016 | 10.51% | 0.0% |
| 2015 | -15.41% | 0.0% |
| 2014 | -2.82% | 0.0% |
| 2013 | -3.14% | 0.0% |
| 2012 | 17.32% | 0.0% |
| 2011 | -18.87% | 0.0% |
| 2010 | 15.93% | 0.0% |
EEM had its best year in 2017 with an annual return of 36.42%. EEM’s worst year over the past decade yielded -18.87% and occurred in 2011. In most years the iShares MSCI Emerging Markets ETF provided moderate returns such as in 2014, 2016, and 2010 where annual returns amounted to -2.82%, 10.51%, and 15.93% respectively.
The year 2019 was the strongest year for JPST, returning 3.36% on an annual basis. The poorest year for JPST in the last ten years was 2017, with a yield of 0.0%. Most years the JPMorgan Ultra-Short Income ETF has given investors modest returns, such as in 2013, 2012, and 2011, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| EEM | $10,000 | $11,761 | 5.47% |
| JPST | $10,000 | $10,791 | 2.57% |
A $10,000 investment in EEM would have resulted in a final balance of $11,761. This is a profit of $1,761 over 3 years and amounts to a compound annual growth rate (CAGR) of 5.47%.
With a $10,000 investment in JPST, the end total would have been $10,791. This equates to a $791 profit over 3 years and a compound annual growth rate (CAGR) of 2.57%.
EEM’s CAGR is 2.90 percentage points higher than that of JPST and as a result, would have yielded $970 more on a $10,000 investment. Thus, EEM outperformed JPST by 2.90% annually.
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