JPST and SCHO Both Park Cash but One Compounds Nearly Double Over Five Years

SCHO tracks the Bloomberg US Treasury 1-3 Year Index and holds only U.S. Treasury notes with one to three years to maturity, creating a pure duration exposure with essentially no credit risk. JPST is actively managed and holds mostly investment-grade corporate debt, asset-backed securities, CLOs, and bank paper, with weighted average maturity under one year. JPST aims to earn credit spread income on top of money-market yields while keeping duration nearly nil. SCHO tends to perform poorly when short-term Treasury yields rise because its NAV is affected by duration. JPST tends to hold up better in rate shocks but can decline when credit markets seize, such as during March 2020.

"SCHO is a pure duration play with zero credit risk. It tracks the Bloomberg US Treasury 1-3 Year Index, holding nothing but U.S. Treasury notes with one to three years to maturity. The implicit bet: when the front end of the curve rallies, typically because the Fed is cutting or the market is fleeing to quality, SCHO wins. When short rates rise, the duration sting shows up in the NAV."

"JPST is an actively managed credit harvest. The portfolio is dominated by investment-grade corporate debt, asset-backed securities, CLOs, and bank paper from issuers like Athene Global Funding, Capital One, Commerzbank, Deutsche Bank, and Bank of Montreal. Weighted average maturity stays under a year. The bet is to clip a credit spread on top of money-market yields while keeping duration almost nil. It wins when spreads are tight and short rates stay elevated. It bleeds when credit markets seize, as briefly happened in March 2020."

"The 2022 rate shock punished SCHO because two-year Treasury yields ripped higher and dragged its NAV down. JPST barely flinched. Run it out further and the pattern holds: JPST has compounded 19.28% over five years versus SCHO's 9.46%. Over the past year, JPST returned 4.47% against SCHO's 3.61%. The credit pickup has paid, and duration has not."

"SCHO's expense edge is real but small. The state-tax exemption on Treasury interest is"

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