Inflation ETFs Lure Investors

Potential investors should also be aware that TIPS are generally more volatile than traditional nominal Treasuries due to the inflation adjustments to their principal value.

TIPS ETFs are indexed to inflation as a way to shield investors from the negative effects of inflation. The securities’ par value rises with inflation as measured by the Consumer Price Index while interest rate remains fixed.

“SCHP is a good idea for cost-conscious investors looking to combat rising prices as it charges just 0.07% per year, well below the annual fee of 0.2% on TIP. Investors have added $132.3 to SCHP this year after pouring over $785 million into the fund last year. Said another way, SCHP is six and a half years old and has accumulated more than half its assets under management in just the past 14 months,” reports Investopedia.

For more information on Treasury inflation protected securities, visit our TIPS category.