Vanguard Extends ETF Price War to TIPS | ETF Trends

Vanguard, the third-largest U.S. exchange traded fund provider, has filed for a new low-cost, short-term inflation-protected securities index fund, fueling the ongoing so-called price war among fund providers.

According to a Securities and Exchange Commission filing, the Vanguard Short-Term Inflation-Protected Fund will will reflect the performance of the Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, which follows the investment return of inflation-protected public obligations of the U.S. Treasury with maturities of less than five years. The fund has an expense ratio of 0.10%.

The underlying index has an effective duration of 2.53 years and an average maturity of 2.59 years.

The new ETF is expected to start trading in the fourth quarter.

TIPS assets and related ETFs have been gaining traction as investors try to hedge growing inflationary concerns in light of the central bank’s loose monetary policies.

“The new Short-Term Inflation Protected Securities Index Fund will provide an additional choice for investors who are seeking protection from inflation,” Vanguard Chief Investment Officer Gus Sauter said in a press release. “The fund’s objective will be to generate returns more closely correlated with realized inflation and to offer investors the potential for less volatility of returns relative to a longer-duration TIPS fund.”