ETF Research and Analysis
by Abby Woodham
Suitability
With its recently lowered expense ratio of just 0.07%, Schwab US TIPS ETF SCHP is the cheapest ETF for buying Treasury Inflation-Protected Securities. This fund tracks the same broad, cap-weighted TIPS bond index as does Read more
With its recently lowered expense ratio of just 0.07%, Schwab US TIPS ETF SCHP is the cheapest ETF for buying Treasury Inflation-Protected Securities. This fund tracks the same broad, cap-weighted TIPS bond index as does Read more
Bull Case
TIPS let investors hedge against unexpected inflation: the possibility that the future rate of inflation is higher than the market expects.
The market's expected rate of future inflation is well below the historical average rate of inflation. TIPS might still be inexpensive.
Individual TIPS are taxed each year on their inflation adjustment, even though investors don't receive most of the adjustment until maturity. SCHP pays out the adjustment. Read more
Bear Case
TIPS funds like SCHP are not correlated with inflation, so an investment in TIP will not guarantee preserved purchasing power over any time period.
SCHP's long duration means it is exposed to interest-rate risk.
If the market overestimates the future rate of inflation, Treasuries will outperform TIPS. Read more
No Great Rotation Into Equity Funds Yet
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