These funds own Treasury Inflation Protected Securities.
Schwab US TIPS (SCHP) is the cheapest ETF for holding Treasury notes and bonds that are inflation-indexed. Funds from Vanguard and BlackRock’s iShares family are almost as cost-efficient.
The funds in this table cover quite a range in average maturity and thus in rate risk. Morningstar is a good source for comparisons of maturities and other matters of bond funds.
Beware, though, of any TIPS fund’s yield number (either the SEC-mandated one or the one related to distributions). Peculiarities in the SEC formula and in the tax rules that determine payouts make these yields meaningless.
If you want to know what your TIPS fund is yielding, go to the government’s Daily Treasury Real Yield Curve Rates. Pick out the column that corresponds to the weighted average maturity of the fund. From the real yield at this point in the TIPS yield curve, subtract the fund’s expense ratio. You now have the expected real return on your fund. It will probably be less than 1%.
For an explanation of our rankings and a directory of fund categories, turn to Forbes Best ETFs.
*Honor Roll member. For the full list, turn to Best ETFs Honor Roll.
For a searchable directory of fund names and tickers, use the ETF Directory.
