State Street Plans Two New TIPS ETFs
March 11th at 9:23am by Tom Lydon
As investors start to ponder the potential inflationary ramifications of the ongoing Fed policies, State Street Gloabl Advisors, the money manager behind the line of SPDR exchange traded funds, has petitioned to launch two new Treasury Inflation Protected Securities funds.
According to a Securities and Exchange Commission regulatory filing, SSgA is planning a SPDR Barclays 0-5 Year TIPS ETF and a SPDR Barclays 1-10 Year TIPS ETF. The two new funds would allow Treasury investors to hedge against inflation over the short- and medium-term.
Treasury inflation protected securities, or “TIPS,” adjust their principal based on changes in the consumer price index – if the CPI rises, principal payments also rise to help mitigate the effects of inflation on bond returns. TIPS are backed by the federal government.
TIPS, though, have fallen recently along with nominal Treasuries as yields rise. [TIPS ETFs: Watch Out if Rates Rise Faster than Inflation]
State Street currently offers the SPDR Barclays TIPS ETF (NYSEArca: IPE). IPE tracks the performance of the Barclays U.S. government Inflation-linked Bond Index, which holds TIPS that have at least1 year remaining to maturity. Holdings have an average maturity of 9.87 years. The ETF has a -0.13% 30-day SEC yield. [TIPS ETF with Negative Yield Sees Outflow]
Additionally, the sponsor has an international TIPs ETF, SPDR DB International Government Inflation-Protected Bond ETF (NYSEArca: WIP). Top countries include U.K., France, Sweden, Brazil and Chile. WIP has an average 11.81 years to maturity and a 0.31% 30-day SEC yield.
Other TIPS-related ETFs include:
- FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (NYSEArca: TDTT)
- FlexShares iBoxx 5-Year Target Duration TIPS Index Fund Profile (NYSEArca: TDTF)
- Global Advantage Inflation-Linked Bond Exchange-Traded Fund (NYSEArca: ILB)
- iShares Global Inflation-Linked Bond Fund (NYSEArca: GTIP)
- iShares International Inflation-Linked Bond Fund (NYSEArca: ITIP)
- iShares Barclays Treasury Inflation Protected Securities Fund (NYSEArca: TIP)
- iShares Barclays 0-5 Year TIPS Bond Fund (NYSEArca: STIP)
- PIMCO Broad U.S. TIPS Index Exchange-Traded Fund (NYSEArca: TIPZ)
- PIMCO 1-5 Year US TIPS Index Exchange-Traded Fund (NYSEArca: STPZ)
- PIMCO 15 Year US TIPS Index Exchange-Traded Fund (NYSEArca: LTPZ)
- Schwab U.S. TIPS ETF (NYSEArca: SCHP)
- Vanguard Short-Term Infl-Prot Sec Idx ETF (NYSEArca: VTIP)
For more information on Treasury inflation protected securities, visit our TIPS category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own TIP.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.