TIP ETF: Inflation Protection, With A Side Of Risk

Summary

  • The overall TIPS market has had a huge run-up of almost 16% since the bond market turmoil of mid-March.
  • The TIP ETF hit a record high of $126.51 last week, but its one-year performance has been in line with other big bond funds.
  • This ETF is not diversified, with only 42 holdings of a single type of U.S. Treasury. It is more volatile than core bond funds.

The iShares TIPS Bond ETF (TIP), which holds the full range of Treasury Inflation-Protected Securities, has had a huge run-up in the last five months, rising almost 16% since it closed at $108.81 on March 18, a day of intense market turmoil. On Thursday, August 6, it closed at a record high of $126.51.

Many readers have been asking me: After this year’s big run-up, is it too late now to begin investing in TIPS?

Read my full analysis on SeekingAlpha.com

TIP ETF year to date

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About Tipswatch

Author of Tipswatch.com 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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