Hedge Against Rising Inflation with TIPS ETFs

Exchange traded fund (ETF) investors may utilize Treasury Inflation-Protected Securities as a way mitigate the potential hit from inflation.

On Friday, the Labor Department said the Consumer Price Index (CPI) rose by 0.5% in March.

A report earlier this week estimated producer prices climbed a seasonally adjusted 0.7% in March, following a 1.6% gain in February and a 0.8% increase in January. The core rate, which excludes the volatile food and energy categories, rose 0.3% in March. [ETFs React To Economic Reports.]

Bonds ETF investors may hedge rising inflation through TIPS. These securities link principal to the CPI, which some say understates true consumer inflation. [Bond ETF Investors Can Hedge Inflation With TIPS.]

The difference between yields on 10-year notes and TIPS recently was at its widest point since March 9, signaling traders are positing for higher inflation. [Treasury ETFs Soft As Traders Await Fed Speeches.]

  • iShares Barclays TIPS (NYSEArca: TIP)
  • iShares Barclays 0-5 Year TIPS (NYSEArca: TIPS)
  • PIMCO 1-5 Year U.S. TIPS (NYSEArca: STPZ)
  • PIMCO 15+ Year U.S. TIPS Index Fund (NYSEArca: LTPZ)
  • PIMCO Broad U.S. TIPS Index Fund (NYSEArca: TIPZ)
  • Schwab U.S. TIPS (NYSEArca: SCHP)
  • SPDR Barclays Capital TIPS ETF (NYSEArca: IPE)

For more information on Treasury Inflation-Protected Securities, visit our TIPs category.

For full disclosure, Tom Lydon’s clients own TIP.

Max Chen contributed to this article.

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