JPST vs. DFAC: What’s The Difference?

The JPMorgan Ultra-Short Income ETF (JPST) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. JPST is a JPMorgan Ultrashort Bond fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between JPST and DFAC? And which fund is better?

The expense ratio of JPST is 0.01 percentage points lower than DFAC’s (0.18% vs. 0.19%). JPST is mostly comprised of A bonds while DFAC has a high exposure to the technology sector. Overall, JPST has provided lower returns than DFAC over the past 3 years.

In this article, we’ll compare JPST vs. DFAC. We’ll look at portfolio growth and risk metrics, as well as at their performance and holdings. Moreover, I’ll also discuss JPST’s and DFAC’s annual returns, industry exposure, and fund composition and examine how these affect their overall returns.

Summary

JPST DFAC
Name JPMorgan Ultra-Short Income ETF Dimensional U.S. Core Equity 2 ETF
Category Ultrashort Bond Large Blend
Issuer JPMorgan Dimensional Fund Advisors
AUM 17.32B 13.53B
Avg. Return 2.57% 13.93%
Div. Yield 0.94% 1.0%
Expense Ratio 0.18% 0.19%

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%.

The Dimensional U.S. Core Equity 2 ETF (DFAC) is a Large Blend fund that is issued by Dimensional Fund Advisors. It currently has 13.53B total assets under management and has yielded an average annual return of 13.93% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.19%.

JPST’s dividend yield is 0.06% lower than that of DFAC (0.94% vs. 1.0%). Also, JPST yielded on average 11.36% less per year over the past decade (2.57% vs. 13.93%). The expense ratio of JPST is 0.01 percentage points lower than DFAC’s (0.18% vs. 0.19%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Holdings

JPST - Holdings

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.

DFAC - Holdings

DFAC Holdings Weight
Apple Inc 4.7%
Microsoft Corp 3.81%
Amazon.com Inc 2.39%
Johnson & Johnson 1.05%
Facebook Inc Class A 1.05%
JPMorgan Chase & Co 1.0%
Alphabet Inc Class C 0.85%
Alphabet Inc Class A 0.84%
Berkshire Hathaway Inc Class B 0.75%
Visa Inc Class A 0.74%

DFAC’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Johnson & Johnson, and Facebook Inc Class A at 4.7%, 3.81%, 2.39%, 1.05%, and 1.05%.

JPMorgan Chase & Co (1.0%), Alphabet Inc Class C (0.85%), and Alphabet Inc Class A (0.84%) have a slightly smaller but still significant weight. Berkshire Hathaway Inc Class B and Visa Inc Class A are also represented in the DFAC’s holdings at 0.75% and 0.74%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

JPST DFAC
Mean Return 0 1.19
R-squared 0 95.1
Std. Deviation 0 15.55
Alpha 0 -2.75
Beta 0 1.12
Sharpe Ratio 0 0.88
Treynor Ratio 0 11.85

The JPMorgan Ultra-Short Income ETF (JPST) has a Sharpe Ratio of 0 with a R-squared of 0 and a Beta of 0. Its Treynor Ratio is 0 while JPST’s Alpha is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.

The Dimensional U.S. Core Equity 2 ETF (DFAC) has a R-squared of 95.1 with a Beta of 1.12 and a Mean Return of 1.19. Its Treynor Ratio is 11.85 while DFAC’s Sharpe Ratio is 0.88. Furthermore, the fund has a Alpha of -2.75 and a Standard Deviation of 15.55.

JPST’s Mean Return is 1.19 points lower than that of DFAC and its R-squared is 95.10 points lower. With a Standard Deviation of 0, JPST is slightly less volatile than DFAC. The Alpha and Beta of JPST are 2.75 points higher and 1.12 points lower than DFAC’s Alpha and Beta.

BTW: Uncorrelated crypto assets such as Bitcoin can serve as a hedge and mitigate risk. I've allocated around 5% of my portfolio to crypto assets through Coinbase - the simplest and cheapest broker I've found! Click here to read more (link to Coinbase).

Performance

Annual Returns

JPST vs. DFAC - Annual Returns

Year JPST DFAC
2020 2.17% 15.8%
2019 3.36% 29.54%
2018 2.19% -9.43%
2017 0.0% 18.82%
2016 0.0% 16.31%
2015 0.0% -2.53%
2014 0.0% 9.56%
2013 0.0% 37.55%
2012 0.0% 17.93%
2011 0.0% -1.96%
2010 0.0% 21.67%

JPST had its best year in 2019 with an annual return of 3.36%. JPST’s worst year over the past decade yielded 0.0% and occurred in 2017. In most years the JPMorgan Ultra-Short Income ETF provided moderate returns such as in 2013, 2012, and 2011 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.

The year 2013 was the strongest year for DFAC, returning 37.55% on an annual basis. The poorest year for DFAC in the last ten years was 2018, with a yield of -9.43%. Most years the Dimensional U.S. Core Equity 2 ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 15.8%, 16.31%, and 17.93% respectively.

Portfolio Growth

JPST vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
JPST $10,000 $10,791 2.57%
DFAC $10,000 $13,586 13.93%

A $10,000 investment in JPST would have resulted in a final balance of $10,791. This is a profit of $791 over 3 years and amounts to a compound annual growth rate (CAGR) of 2.57%.

With a $10,000 investment in DFAC, the end total would have been $13,586. This equates to a $3,586 profit over 3 years and a compound annual growth rate (CAGR) of 13.93%.

JPST’s CAGR is 11.36 percentage points lower than that of DFAC and as a result, would have yielded $2,795 less on a $10,000 investment. Thus, JPST performed worse than DFAC by 11.36% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open an Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply