Morningstar Rating

ETF Research and Analysis

by Abby Woodham
Suitability
IShares Barclays TIPS Bond TIP is the largest Treasury Inflation-Protected Securities exchange-traded fund. TIP tracks a broad, cap-weighted TIPS bond index that includes any issuance with more than a year left until 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.
After their price decline in the second quarter of 2013, TIPS now offer cheaper inflation hedging than in recent years.
This fund pays out the CPI adjustment of its holdings, unlike individual TIPS, which don't distribute the adjustment until maturity. Read more 

Bear Case

TIP's long duration means it is exposed to interest-rate risk.
TIPS funds are not correlated with inflation, so an investment in TIP will not guarantee preserved purchasing power over any time period.
If the market overestimates the future rate of inflation, Treasuries will outperform TIPS. Read more 

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