Best TIPS ETFs for Q1 2022 - Investopedia

Exchange-traded funds (ETFs) that invest in U.S. Treasury inflation-protected securities (TIPS) present a convenient way for investors to gain exposure to ... News MarketsNews PartOf Bond,Commodity,andVolatilityETFs ExploreTheGuide Overview BestInvestmentGradeCorporateBond BestHighYieldCorporateBondETFs BestTreasuryETFs BestTIPSETFs BestMunicipalBondETFs BestCommoditiesETFs BestPreciousMetalETFs BestGoldETFs BestSilverETFs BestPlatinumETFs BestCopperETFs BestOilETFs BestNaturalGasETFs BestAgriculturalCommodityETFs BestInverseOilETFs BestLeveragedGoldETFs BestVIXETFs BestInverseVIXETFs Exchange-tradedfunds(ETFs)thatinvestinU.S.Treasuryinflation-protectedsecurities(TIPS)presentaconvenientwayforinvestorstogainexposuretothesegovernment-guaranteedfixed-incomeinstruments.TIPSareTreasurysecuritiesindexedtoinflation,meaningthatwheninflationrises,sodoestheprincipalamountofthesecurityandtheassociatedinterestpayments. TIPSspreadisanimportantrelatedmetricthatshowsthedifferenceinyieldbetweenTIPSandregularU.S.Treasurysecuritieswiththesamematurity.Thisshowshowmuchpeoplearewillingtopayforinflationprotectionandindicateshowmuchinflationisanticipatedbyinvestors. The10-yearTIPSspreadasofDec.1,2021,is2.44%.Thismeansthat10-yearTIPShaveayield2.44%lowerthanthe10-yearTreasury,soinflationwouldneedtoaverage2.44%peryearforthetwotohavethesamereturns. TIPSfundshaveexperiencedrisinginflowsthisyear,asacceleratingpriceincreasessparkinvestorfearsaboutinflationamidtheeconomy’songoingrecovery.TIPSETFsenableinvestorstosafeguardthevalueoftheirportfoliosbymitigatingagainsttheerosionofpurchasingpowercausedbyinflation. KeyTakeaways U.S.Treasuryinflation-protectedsecurities(TIPS)havedramaticallyunderperformedthebroaderequitymarketoverthepastyear.Exchange-tradedfunds(ETFs)thatinvestinTIPSandhavethebestone-yeartrailingtotalreturns,areLTPZ,SPIP,andGTIP.ThetopholdingsoftheseETFSareTIPS,whichofferprotectionagainsttheerosionofpurchasingpowerduetoinflation. Thereare15distinctTIPSETFsthattradeintheUnitedStates,excludinginverseandleveragedETFsaswellasfundswithlessthan$50millionin assetsundermanagement(AUM).TIPS,asmeasuredbytheBloombergUSTIPSIndex,havesignificantlyunderperformedthebroadermarket.Theyhaveatotalreturnof6.8%overthepast12monthscomparedtotheS&P500’stotalreturnof27.9%,asofNov.30,2021.Thebest-performingTIPSETF,basedonperformanceoverthepastyear,isthePIMCO15+YearUSTIPSIndexETF(LTPZ).WeexaminethethreebestTIPSETFsbelow.AllnumbersbelowareasofNov.30,2021. PIMCO15+YearUSTIPSIndexETF(LTPZ) PerformanceOverOne-Year:8.4%ExpenseRatio:0.20%AnnualDividendYield:3.22%Three-MonthAverageDailyVolume:135,000AssetsUnderManagement:$954.9millionInceptionDate:Sept.3,2009Issuer:AllianzInvestmentManagement LLC LTPZseekstotracktheICEBofAMerrillLynch15+YearUSInflation-LinkedTreasuryIndex,whichiscomprisedofTIPSwithmaturitiesthatare15yearsorgreater.TheETFaimstohelpinvestorspreservethepurchasingpoweroftheirmoneyagainstinflationwhilealsoofferinglowdefaultrisk.Thelongermaturityofthesecuritiesheldmeansthereisgreaterpotentialforhigherreturnsthanafundcomprisedoflower-maturitysecurities,butitalsoincreasesriskduetogreaterexposuretochangesininterestrates.ItstopthreeholdingsarethreedifferentsetsofTIPSmaturingin2044,2041,and2042,respectively. SPDRPortfolioTIPSETF(SPIP) PerformanceOverOne-Year:6.8%ExpenseRatio:0.12%AnnualDividendYield:4.18%Three-MonthAverageDailyVolume:1,254,632AssetsUnderManagement:$3.5billionInceptionDate:May25,2007Issuer:StateStreet SPIPaimstotracktheperformanceoftheBloombergU.S.GovernmentInflation-LinkedBondIndex,whichiscomprisedofTIPShavingatleast1yearremainingtomaturityontheindex'srebalancingdateandthesizeoftheissuemustbeforanamountequaltoorgreaterthan$500million.TheETFisdesignedtoofferalow-costwayforinvestorstoprotecttheirwealthagainstthecorrosiveeffectsofinflation.Theaveragematurityofthesecuritiesthatcomprisethefundisapproximately8.8years.Thefund'stopthreeholdingsarethreedifferentsetsofTIPSmaturingin2026,2023,and2024,respectively. GoldmanSachsAccessInflationProtectedUSDBondETF(GTIP) PerformanceOverOne-Year:6.8%ExpenseRatio:0.12%AnnualDividendYield:3.46%Three-MonthAverageDailyVolume:30,189AssetsUnderManagement:$190.5millionInceptionDate:Oct.2,2018Issuer:GoldmanSachs GTIPseekstotracktheperformanceoftheFTSEGoldmanSachsTreasuryInflationProtectedUSDBondIndex,whichprovidesexposuretoTIPSmeetingcertainliquidityandseasoningcriteria.TheETFemploysastrategyofinvestinginso-called"off-the-run"securities,whichtendtobetradedlessthannewerissued"on-the-run"securities.Thelowerdemandfortheless-traded,"off-the-run"securitiestendstomakethemcheaperthantheir"on-the-run"counterparts.Liketheothertwofundsabove,GTIPiscomprisedofTIPS,thusofferinginvestorsawaytoprotectagainsttheerosionofpurchasingpowerduetoinflation.ItstopthreeholdingsarethreedifferentsetsofTIPSmaturingin2028,2027,and2025,respectively. Thecomments,opinions,andanalysesexpressedhereinareforinformationalpurposesonlyandshouldnotbeconsideredindividualinvestmentadviceorrecommendationstoinvestinanysecurityoradoptanyinvestmentstrategy.Whilewebelievetheinformationprovidedhereinisreliable,wedonotwarrantitsaccuracyorcompleteness.Theviewsandstrategiesdescribedinourcontentmaynotbesuitableforallinvestors.Becausemarketandeconomicconditionsaresubjecttorapidchange,allcomments,opinions,andanalysescontainedwithinourcontentarerenderedasofthedateofthepostingandmaychangewithoutnotice.Thematerialisnotintendedasacompleteanalysisofeverymaterialfactregardinganycountry,region,market,industry,investment,orstrategy. ArticleSources Investopediarequireswriterstouseprimarysourcestosupporttheirwork.Theseincludewhitepapers,governmentdata,originalreporting,andinterviewswithindustryexperts.Wealsoreferenceoriginalresearchfromotherreputablepublisherswhereappropriate.Youcanlearnmoreaboutthestandardswefollowinproducingaccurate,unbiasedcontentinour editorialpolicy. FREDEconomicData(FederalReserveBankofSt.Louis).“10-YearBreakevenInflationRate.”AccessedDec.1,2021. TheWallStreetJournal."AsInflationFearsGrow,InvestorsFlocktoTIPS."AccessedDec.1,2021. YCharts.“FinancialData.”AccessedDec.1,2021. ETFDatabase.“ETFScreener.”AccessedDec.1,2021. ETFDatabase."PIMCO15+YearUSTIPSIndexETF(LTPZ)."AccessedDec.1,2021. PIMCO."15+YearU.S.TIPSIndexExchange-TradedFund(LTPZ)."AccessedDec.2,2021. ETFDatabase."SPDRPortfolioTIPSETF(SPIP)."AccessedDec.1,2021. StateStreetGlobalAdvisers."SPDRPortfolioTIPSETF(SPIP)."AccessedDec.2,2021. GoldmanSachs."GoldmanSachsAccessInflationProtectedUSDBondETF(GTIP)."AccessedDec.2,2021. ETFDatabase."GoldmanSachsAccessInflationProtectedUSDBondETF(GTIP)."AccessedDec.1,2021. CompareAccounts AdvertiserDisclosure × TheoffersthatappearinthistablearefrompartnershipsfromwhichInvestopediareceivescompensation.Thiscompensationmayimpacthowandwherelistingsappear.Investopediadoesnotincludealloffersavailableinthemarketplace. Provider Name Description PartOf Bond,Commodity,andVolatilityETFsGuide BestInvestmentGradeCorporateBondETFsforQ12022 1of18 BestHigh-YieldBondETFsforQ12022 2of18 BestTreasuryETFsforQ12022 3of18 BestTIPSETFsforQ12022 4of18 BestMunicipalBondETFsforQ12022 5of18 BestCommoditiesETFsforQ12022 6of18 BestPreciousMetalsETFsforQ12022 7of18 BestGoldETFsforQ12022 8of18 3SilverETFsforQ12022 9of18 3PlatinumETFsforQ12022 10of18 2CopperETFsforQ12022 11of18 BestOilETFsforQ12022 12of18 3NaturalGasETFsforQ12022 13of18 BestAgriculturalCommodityETFsforQ12022 14of18 Best(andOnly)InverseOilETFforQ12022 15of18 4LeveragedGoldETFsforQ12022 16of18 BestVIXETFsforQ12022 17of18 Best(andOnly)InverseVIXETFforQ12022 18of18 RelatedArticles ETFs BestMid-CapETFsforQ12022 TopETFs BestEuropeanTreasuryBondETFsforQ12022 TopETFs BestETFsforQ12022 TopETFs BestBondETFsfor2022 TopETFs BestETFsTargetingStartupsforQ12022 ETFs TopSociallyResponsibleBondETFsfor2022 PartnerLinks RelatedTerms WhatIsNominalInterestRate? Nominalinterestrateistheinterestratebeforetakinginflationintoaccount,incontrasttorealinterestratesandeffectiveinterestrates. more Inflation-IndexedSecurity Aninflation-indexedsecurityisasecuritythatguaranteesareturnhigherthantherateofinflationifitisheldtomaturity.Inflation-indexedsecuritieslinktheircapitalappreciation,orcouponpayments,toinflationrates. more BondFundDefinition Abondfundinvestsprimarilyinbonds(government,corporate,municipal,convertible)andotherdebtinstrumentstogeneratemonthlyincome. more 30-YearTreasury The30-YearTreasury,formerlythebellwetherU.S.bond,isaU.S.Treasurydebtobligationthathasamaturityof30years. more WhatIsaCommodityETF? AcommodityETFisanexchange-tradedfundthatinvestsinphysicalcommodities,suchasagriculturalgoods,naturalresources,andpreciousmetals. more TreasuryInflation-ProtectedSecuritiesProtectInvestorsFromInflation TreasuryInflation-ProtectedSecurity(TIPS)isabondthatoffsetstheeffectsofrisingpricesbyadjustingitsprincipalvalueasinflationrises. more