iShares Barclays TIPS BondTIP

Morningstar Rating

ETF Research and Analysis

by Scott Burns
Suitability

IShares Barclays TIPS Bond TIP is ideal for investors looking for easy and low-cost access to Treasury Inflation-Protected Securities. The fund provides a laddered structure with the underlying index holding securities that   Read more 

Bull Case

The fund is very inexpensive to own and provides inflation protection in one fell swoop.
The inflation break-even rate, though off of its lows, is still well under its historical average.
The fund only owns inflation-protected Treasuries, which are backed by the full faith and credit of the U.S. government. Thus, credit risk is essentially nil. Read more 

Bear Case

The CPI adjustment inherent in TIPS is a double-edged sword. In periods of deflation, the TIPS principal value adjusts downward. This adjustment cancels out against the coupon payments in the underlying.
Despite its inflation protection, fluctuating interest rates still lead to volatility here.
Because this fund must be bought and sold through a broker, commissions can erode its low-cost advantage for frequent traders or regular investors. Read more 

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