The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) and the JPMorgan Ultra-Short Income ETF (JPST) are both among the Top 100 ETFs. VWO is a Vanguard Diversified Emerging Mkts fund and JPST is a JPMorgan Ultrashort Bond fund. So, what’s the difference between VWO and JPST? And which fund is better?
The expense ratio of VWO is 0.08 percentage points lower than JPST’s (0.1% vs. 0.18%). VWO also has a high exposure to the financial services sector while JPST is mostly comprised of A bonds. Overall, VWO has provided higher returns than JPST over the past ten years.
In this article, we’ll compare VWO vs. JPST. We’ll look at industry exposure and performance, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VWO’s and JPST’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
Summary
| VWO | JPST | |
| Name | Vanguard FTSE Emerging Markets Index Fund ETF Shares | JPMorgan Ultra-Short Income ETF |
| Category | Diversified Emerging Mkts | Ultrashort Bond |
| Issuer | Vanguard | JPMorgan |
| AUM | 117.28B | 17.32B |
| Avg. Return | 5.79% | 2.57% |
| Div. Yield | 1.98% | 0.94% |
| Expense Ratio | 0.1% | 0.18% |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) is a Diversified Emerging Mkts fund that is issued by Vanguard. It currently has 117.28B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 1.98% with an expense ratio of 0.1%.
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%.
VWO’s dividend yield is 1.04% higher than that of JPST (1.98% vs. 0.94%). Also, VWO yielded on average 3.22% more per year over the past decade (5.79% vs. 2.57%). The expense ratio of VWO is 0.08 percentage points lower than JPST’s (0.1% vs. 0.18%).
Fund Composition
Holdings
| VWO Holdings | Weight |
| Tencent Holdings Ltd | 5.29% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.73% |
| Taiwan Semiconductor Manufacturing Co Ltd | 4.58% |
| Meituan | 1.88% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 1.7% |
| Reliance Industries Ltd Shs Dematerialised | 1.06% |
| Naspers Ltd Class N | 1.01% |
| Vale SA | 0.92% |
| Infosys Ltd | 0.91% |
| China Construction Bank Corp Class H | 0.84% |
VWO’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Taiwan Semiconductor Manufacturing Co Ltd, Meituan, and Taiwan Semiconductor Manufacturing Co Ltd ADR at 5.29%, 4.73%, 4.58%, 1.88%, and 1.7%.
Reliance Industries Ltd Shs Dematerialised (1.06%), Naspers Ltd Class N (1.01%), and Vale SA (0.92%) have a slightly smaller but still significant weight. Infosys Ltd and China Construction Bank Corp Class H are also represented in the VWO’s holdings at 0.91% and 0.84%.
| 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
| VWO | JPST | |
| Mean Return | 0.45 | 0 |
| R-squared | 81.69 | 0 |
| Std. Deviation | 17.64 | 0 |
| Alpha | -1.36 | 0 |
| Beta | 1.06 | 0 |
| Sharpe Ratio | 0.27 | 0 |
| Treynor Ratio | 3.14 | 0 |
The Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) has a R-squared of 81.69 with a Treynor Ratio of 3.14 and a Standard Deviation of 17.64. Its Mean Return is 0.45 while VWO’s Sharpe Ratio is 0.27. Furthermore, the fund has a Beta of 1.06 and a Alpha of -1.36.
The JPMorgan Ultra-Short Income ETF (JPST) has a Sharpe Ratio of 0 with a Beta of 0 and a R-squared of 0. Its Mean Return is 0 while JPST’s Alpha is 0. Furthermore, the fund has a Standard Deviation of 0 and a Treynor Ratio of 0.
VWO’s Mean Return is 0.45 points higher than that of JPST and its R-squared is 81.69 points higher. With a Standard Deviation of 17.64, VWO is slightly more volatile than JPST. The Alpha and Beta of VWO are 1.36 points lower and 1.06 points higher than JPST’s Alpha and Beta.
Performance
Annual Returns
| Year | VWO | JPST |
| 2020 | 15.32% | 2.17% |
| 2019 | 20.4% | 3.36% |
| 2018 | -14.57% | 2.19% |
| 2017 | 31.38% | 0.0% |
| 2016 | 11.75% | 0.0% |
| 2015 | -15.35% | 0.0% |
| 2014 | 0.6% | 0.0% |
| 2013 | -5.0% | 0.0% |
| 2012 | 18.84% | 0.0% |
| 2011 | -18.68% | 0.0% |
| 2010 | 18.99% | 0.0% |
VWO had its best year in 2017 with an annual return of 31.38%. VWO’s worst year over the past decade yielded -18.68% and occurred in 2011. In most years the Vanguard FTSE Emerging Markets Index Fund ETF Shares provided moderate returns such as in 2014, 2016, and 2020 where annual returns amounted to 0.6%, 11.75%, and 15.32% 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 |
| VWO | $10,000 | $11,861 | 5.79% |
| JPST | $10,000 | $10,791 | 2.57% |
A $10,000 investment in VWO would have resulted in a final balance of $11,861. This is a profit of $1,861 over 3 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
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%.
VWO’s CAGR is 3.22 percentage points higher than that of JPST and as a result, would have yielded $1,070 more on a $10,000 investment. Thus, VWO outperformed JPST by 3.22% annually.
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