ETF Research and Analysis

by Abby Woodham
Suitability
Most Treasury Inflation-Protected Securities funds are cap-weighted, and their duration can fluctuate because of changing inflation expectations, which makes such funds difficult to slot into an existing income portfolio   Read more 

Bull Case

TIPS let investors hedge against the possibility that the future rate of inflation will be higher than expected.
TDTT is the only ETF that targets a three-year duration, removing duration volatility.
Because TDTT buys the short end of the TIPS maturity curve, it is more correlated with inflation than funds that buy the entire spectrum of TIPS. Read more 

Bear Case

Although TDTT is more correlated with inflation than broad funds, it is still an imperfect inflation hedge.
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. TDTT will suspend distributions until the decrease is fully distributed. Read more 

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Broad Fixed-Income Exposure At a Low Cost 
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