Morningstar Rating

ETF Research and Analysis

by Abby Woodham
PIMCO 1-5 Year US TIPS Index ETF tracks a cap-weighted index of Treasury Inflation-Protected Securities that have one to five years remaining until maturity. Compared with broad TIPS ETFs, which track the entire maturity   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.
Because STPZ buys the short end of the TIPS maturity curve, it is more correlated with inflation than funds that buy the entire spectrum of TIPS.
STPZ is less volatile than broad TIPS funds. Read more 

Bear Case

STPZ's duration is slightly longer than most other short-term TIPS ETFs'.
If the market overestimates the future rate of inflation, Treasuries will outperform TIPS.
If deflation occurs, the fund will distribute the inflation-adjusted decrease, offsetting the usual coupon payment. STPZ will suspend distributions until the decrease is fully distributed. Read more 

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