For instance, the PIMCO 1-5 Year U.S. TIPS ETF (NYSEArca: STPZ) or iShares 0-5 Year TIPS Bond ETF (NYSEArca: STIP) both come with low average durations, which makes them less sensitive to interest rate hikes. STPZ has a 2.28 year effective duration and an estimated yield to maturity of 0.56%. STIP has a 2.56 year duration and a average yield to maturity of 0.61%. Fabian warns that the income payments are erratic due to the coupon schedules of the underlying holdings.
The PIMCO Global Advantage Inflation-Linked Bond ETF (NYSEArca: ILB) is an actively managed bond fund that tracks inflation linked emerging market and developed economy bonds. Top regional allocations include U.S. 21%, Brazil 20%, Eurozone 14% and Mexico 12%. ILB has a 6.65 year effective duration and an estimated yield to maturity of 4.07%.
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.