XLK vs. JPST: What’s The Difference?

The Technology Select Sector SPDR Fund (XLK) and the JPMorgan Ultra-Short Income ETF (JPST) are both among the Top 100 ETFs. XLK is a SPDR State Street Global Advisors Technology fund and JPST is a JPMorgan Ultrashort Bond fund. So, what’s the difference between XLK and JPST? And which fund is better?

The expense ratio of XLK is 0.06 percentage points lower than JPST’s (0.12% vs. 0.18%). XLK also has a high exposure to the technology sector while JPST is mostly comprised of A bonds. Overall, XLK has provided higher returns than JPST over the past ten years.

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

Summary

XLK JPST
Name Technology Select Sector SPDR Fund JPMorgan Ultra-Short Income ETF
Category Technology Ultrashort Bond
Issuer SPDR State Street Global Advisors JPMorgan
AUM 42.3B 17.32B
Avg. Return 20.02% 2.57%
Div. Yield 0.73% 0.94%
Expense Ratio 0.12% 0.18%

The Technology Select Sector SPDR Fund (XLK) is a Technology fund that is issued by SPDR State Street Global Advisors. It currently has 42.3B total assets under management and has yielded an average annual return of 20.02% over the past 10 years. The fund has a dividend yield of 0.73% with an expense ratio of 0.12%.

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%.

XLK’s dividend yield is 0.21% lower than that of JPST (0.73% vs. 0.94%). Also, XLK yielded on average 17.45% more per year over the past decade (20.02% vs. 2.57%). The expense ratio of XLK is 0.06 percentage points lower than JPST’s (0.12% vs. 0.18%).

Fund Composition

Holdings

XLK - Holdings

XLK Holdings Weight
Apple Inc 21.45%
Microsoft Corp 20.37%
NVIDIA Corp 4.98%
Visa Inc Class A 3.95%
PayPal Holdings Inc 3.42%
Mastercard Inc A 3.19%
Adobe Inc 2.8%
Salesforce.com Inc 2.26%
Intel Corp 2.26%
Cisco Systems Inc 2.23%

XLK’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 21.45%, 20.37%, 4.98%, 3.95%, and 3.42%.

Mastercard Inc A (3.19%), Adobe Inc (2.8%), and Salesforce.com Inc (2.26%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the XLK’s holdings at 2.26% and 2.23%.

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

XLK JPST
Mean Return 1.7 0
R-squared 73.56 0
Std. Deviation 15.58 0
Alpha 10.43 0
Beta 0.95 0
Sharpe Ratio 1.27 0
Treynor Ratio 21.44 0

The Technology Select Sector SPDR Fund (XLK) has a Beta of 0.95 with a Standard Deviation of 15.58 and a Mean Return of 1.7. Its Sharpe Ratio is 1.27 while XLK’s Alpha is 10.43. Furthermore, the fund has a R-squared of 73.56 and a Treynor Ratio of 21.44.

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

XLK’s Mean Return is 1.70 points higher than that of JPST and its R-squared is 73.56 points higher. With a Standard Deviation of 15.58, XLK is slightly more volatile than JPST. The Alpha and Beta of XLK are 10.43 points higher and 0.95 points higher than JPST’s Alpha and Beta.

Performance

Annual Returns

XLK vs. JPST - Annual Returns

Year XLK JPST
2020 43.67% 2.17%
2019 49.97% 3.36%
2018 -1.56% 2.19%
2017 34.27% 0.0%
2016 14.81% 0.0%
2015 5.62% 0.0%
2014 17.75% 0.0%
2013 25.98% 0.0%
2012 15.47% 0.0%
2011 2.69% 0.0%
2010 11.6% 0.0%

XLK had its best year in 2019 with an annual return of 49.97%. XLK’s worst year over the past decade yielded -1.56% and occurred in 2018. In most years the Technology Select Sector SPDR Fund provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 14.81%, 15.47%, and 17.75% 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

XLK vs. JPST - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLK $10,000 $21,210 20.02%
JPST $10,000 $10,791 2.57%

A $10,000 investment in XLK would have resulted in a final balance of $21,210. This is a profit of $11,210 over 3 years and amounts to a compound annual growth rate (CAGR) of 20.02%.

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%.

XLK’s CAGR is 17.45 percentage points higher than that of JPST and as a result, would have yielded $10,419 more on a $10,000 investment. Thus, XLK outperformed JPST by 17.45% annually.


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