TIPS ETF

Government issued and backed, Treasury inflation-protected securities (TIPS) are bonds that offer investors significant protection against inflation by providing guaranteed adjustments for inflation at periodic intervals. TIPS etfs offer the same level of inflation protection, but in a more easily trade-able and liquid form that allows better control for investors. This makes TIPS ETF funds a valuable addition to a comprehensive investment portfolio. TIPS ETF funds are especially popular during times of economic prosperity, but can be a valuable hedging tool even during downturns since they remain one of the safest and most reliable ETF investments available on the market.

Why TIPS ETFs?


Historically, the general movement of the stock exchange and the U.S. economy has been upward; therefore, from a historic standpoint it is wise and even essential for investors to hedge against these upward movements and to guarantee a minimum level of return on their investments. TIPS and TIPS ETFs provide solid protection against inflationary movement in the economy; while their returns are not as high as most other Treasury bonds, the security they afford can be far more valuable for many investors who wish to minimize their risk. TIPS ETFs are somewhat more volatile than the TIPS bonds they are based on; this is due to the greater ease of turnover and transfer that these ETFs enjoy over the more stable Treasury securities. Most market analysts recommend incorporating inflation-protected securities into an overall investment strategy; TIPS ETFs can be a convenient way to diversify these holdings while managing risk.


TIPS bonds vs. TIPS ETFs


In many cases, TIPS ETFs offer better cash flow control for investors than the TIPS they are based on, since TIPS bonds pay interest semiannually while TIPS ETFs can be traded at any time without potential loss of interest. This makes TIPS ETF funds a wise choice for investors who want maximum flexibility in handling their money.

TIPS ETFs list


TIPS ETFs are a relatively new entry in the ETF marketplace. As a result, there are still relatively few TIPS ETF funds on the market. The best-known and most popular are listed below.
  • Barclays TIPS Bond Fund (TIP)
  • SPDR Barclays Capital TIPS ETF (IPE)
  • PIMCO Broad U.S. TIPS Index Fund (TIPZ)
  • SPDR DB International Government Inflation-Protected Bond ETF (WIP)
Of these, Barclays TIPS Bond Fund is probably the best-known and most popular of the TIPS ETFs with over a million shares traded daily. The Barclays TIPS ETF boasts assets in excess of $20 billion, making it one of the largest TIPS ETFs on the market as well; it dominates the TIPS ETF market with over 90% of market share in this sector.
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