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.

Summary

TIP JPST
Name iShares TIPS Bond ETF JPMorgan Ultra-Short Income ETF
Category Inflation-Protected Bond Ultrashort Bond
Issuer iShares JPMorgan
AUM 28.3B 17.32B
Avg. Return 4.07% 2.57%
Div. Yield 1.87% 0.94%
Expense Ratio 0.19% 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%).

Fund Composition

Holdings

TIP - Holdings

TIP Bond Sectors Weight
AAA 99.31%
Others 0.69%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

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 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

TIP JPST
Mean Return 0.28 0
R-squared 66.57 0
Std. Deviation 4.33 0
Alpha -0.58 0
Beta 1.18 0
Sharpe Ratio 0.62 0
Treynor Ratio 2.24 0

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.

Performance

Annual Returns

TIP vs. JPST - Annual Returns

Year TIP JPST
2020 10.91% 2.17%
2019 8.28% 3.36%
2018 -1.43% 2.19%
2017 2.92% 0.0%
2016 4.56% 0.0%
2015 -1.59% 0.0%
2014 3.49% 0.0%
2013 -8.65% 0.0%
2012 6.8% 0.0%
2011 13.4% 0.0%
2010 6.1% 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

Fund Initial Balance Final Balance CAGR
TIP $10,000 $11,837 4.07%
JPST $10,000 $10,791 2.57%

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.


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 Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

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

Leave a Reply