The iShares TIPS Bond ETF (NYSEArca: TIP) has underperformed Treasury funds with similar durations as investors ratchet down their inflation expectations.

TIP is down 3.6% year to date compared with a loss of 1.5% for iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF). TIP has a weighted average maturity of 8.8 years, according to sponsor BlackRock.

The ETF is designed to invest in Treasury Inflation Protected Securities. Investors have pulled over $3 billion from TIP year to date. The ETF currently holds $18.5 billion.

The demand for inflation-protected bonds tends to rise when inflationary expectations are rising, and vice versa, writes Ed Yardeni at Yardeni Research.

“In the current environment, inflationary expectations are falling, and so is the demand for inflation-protected bonds, which is why the TIPS yield is rising,” Yardeni said.

He also points out that TIPS prices are highly correlated with the price of gold.