Investors should know: TIPS ETFs and mutual funds are riskier than you think


  • TIPS mutual funds aren’t diversified. Total Bond Market funds make a better ‘core’ fixed-income investment.
  • TIPS prices can be volatile, surprising investors when the prices head down.
  • Alternative? Buy individual TIPS and hold them to maturity, along with I Bonds up to the yearly cap.

A lot of investors believe putting money into an ETF or mutual fund holding Treasury Inflation-Protected Securities is a very safe ‘core’ investment. After all, these are investments in U.S. Treasurys, so there is no credit risk.

But there is interest-rate risk and diversification risk, and price swings for these mutual funds and ETFs and be quite dramatic.

Read my full analysis at


About Tipswatch

Author of blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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1 Response to Investors should know: TIPS ETFs and mutual funds are riskier than you think

  1. Len says:

    VERY good points. After I had extolled the value of TIPS a friend invested in Vanguard’s TIPS fund (which I never suggested). When he sustained an 8% loss over a couple months he was shocked at how volatile this “safe” investment could be. There are only a few investment writers who stress the difference between bond funds and bonds but everyone should read them. Larry Swedroe comes to mind. Len

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