So far this year, U.S. inflation linked debt maturing in 10 years or less has returned 5.1%, compared to 1.1% for the broad Treasury market, according to Bank of America Merrill Lynch data.
The ongoing uncertainty of Greece exiting the Eurozone, and the slower than usual economic growth has investors seeking safe havens. The TIPS ETFs have allowed investors to park capital into a haven other than the usual commodities such as gold.
The greatest risk to TIPS is that they increase their yield to match inflation, which is tied to the CPI (Consumer Price Index). The risk is posed if the CPI is not an accurate tracking of inflation. [TIPs ETFs and Negative Yields]
Other TIPS ETFs:
- PIMCO 1-5 Year TIPS (NYSEArca: STPZ)
- SPDR Barclays Capital TIPS (NYSEArca: IPE)
- Schwab U.S. TIPS (NYSEArca: SCHP)
iShares Barclays TIPS Bond Fund ETF
Tisha Guerrero contributed to this article.
Full disclosure: Tom Lydon’s clients own TIP.