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.
|Name||iShares TIPS Bond ETF||JPMorgan Ultra-Short Income ETF|
|Category||Inflation-Protected Bond||Ultrashort Bond|
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%).
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).
|TIP Bond Sectors||Weight|
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 Bond Sectors||Weight|
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.
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).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|Fund||Initial Balance||Final Balance||CAGR|
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.
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)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) 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!
3) 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!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.