ETF Research and Analysis

by Abby Woodham
FlexShares iBoxx 5-Year Target Duration TIPS ETF TDTF lets investors buy a portfolio of Treasury Inflation-Protected Securities with a constant modified adjusted duration of five years. Modified adjusted duration measures   Read more 

Bull Case

TIPS let investors hedge against the possibility that the future rate of inflation is higher than the market expects.
TDTF is the only ETF that targets a five-year duration, removing duration volatility. Read more 

Bear Case

Although TDTF is more correlated with inflation than broad funds, its duration is high enough to diminish its inflation-hedging capability compared with short-duration funds.
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. TDTF will suspend distributions until the decrease is fully distributed. Read more 

This ETF's Index Is a Victim of Its Own Success 
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