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TIP vs. JPST: What’s The Difference?

The iShares TIPS Bond ETF (TIP) and the JPMorgan Ultra-Short Income ETF (JPST) are both among the Top 100 ETFs. TIP is a iShares Inflation-Protected Bond fund and JPST is a JPMorgan Ultrashort Bond fund. So, what’s the difference between TIP and JPST? And which fund is better?

The expense ratio of TIP is 0.01 percentage points higher than JPST’s (0.19% vs. 0.18%). TIP is mostly comprised of AAA bonds and JPST has a high exposure to A bond. Overall, TIP has provided higher returns than JPST over the past ten years.

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

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Summary

TIPJPST
NameiShares TIPS Bond ETFJPMorgan Ultra-Short Income ETF
CategoryInflation-Protected BondUltrashort Bond
IssueriSharesJPMorgan
AUM28.3B17.32B
Avg. Return4.07%2.57%
Div. Yield1.87%0.94%
Expense Ratio0.19%0.18%

The iShares TIPS Bond ETF (TIP) is a Inflation-Protected Bond fund that is issued by iShares. It currently has 28.3B total assets under management and has yielded an average annual return of 4.07% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 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%.

TIP’s dividend yield is 0.93% higher than that of JPST (1.87% vs. 0.94%). Also, TIP yielded on average 1.50% more per year over the past decade (4.07% vs. 2.57%). The expense ratio of TIP is 0.01 percentage points higher than JPST’s (0.19% vs. 0.18%).

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Fund Composition

Holdings

TIP - Holdings

TIP Bond SectorsWeight
AAA99.31%
Others0.69%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

TIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.31%, 0.69%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

JPST - Holdings

JPST Bond SectorsWeight
A39.21%
BBB36.75%
AAA14.9%
AA9.14%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
US Government0.0%

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.

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Risk Analysis

TIPJPST
Mean Return0.280
R-squared66.570
Std. Deviation4.330
Alpha-0.580
Beta1.180
Sharpe Ratio0.620
Treynor Ratio2.240

The iShares TIPS Bond ETF (TIP) has a Beta of 1.18 with a R-squared of 66.57 and a Alpha of -0.58. Its Treynor Ratio is 2.24 while TIP’s Standard Deviation is 4.33. Furthermore, the fund has a Sharpe Ratio of 0.62 and a Mean Return of 0.28.

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

TIP’s Mean Return is 0.28 points higher than that of JPST and its R-squared is 66.57 points higher. With a Standard Deviation of 4.33, TIP is slightly more volatile than JPST. The Alpha and Beta of TIP are 0.58 points lower and 1.18 points higher than JPST’s Alpha and Beta.

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Performance

Annual Returns

TIP vs. JPST - Annual Returns

YearTIPJPST
202010.91%2.17%
20198.28%3.36%
2018-1.43%2.19%
20172.92%0.0%
20164.56%0.0%
2015-1.59%0.0%
20143.49%0.0%
2013-8.65%0.0%
20126.8%0.0%
201113.4%0.0%
20106.1%0.0%

TIP had its best year in 2011 with an annual return of 13.4%. TIP’s worst year over the past decade yielded -8.65% and occurred in 2013. In most years the iShares TIPS Bond ETF provided moderate returns such as in 2014, 2016, and 2010 where annual returns amounted to 3.49%, 4.56%, and 6.1% 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

TIP vs. JPST - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
TIP$10,000$11,8374.07%
JPST$10,000$10,7912.57%

A $10,000 investment in TIP would have resulted in a final balance of $11,837. This is a profit of $1,837 over 3 years and amounts to a compound annual growth rate (CAGR) of 4.07%.

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%.

TIP’s CAGR is 1.50 percentage points higher than that of JPST and as a result, would have yielded $1,046 more on a $10,000 investment. Thus, TIP outperformed JPST by 1.50% annually.


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