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TIPS (Treasury Inflation Protected Securities) are bonds issued by the US
government whose yields are linked to inflation. TIPS are attractive as diversifiers: they tend to have
low correlations with other asset classes. For
more information about TIPS, see
here.
There are several very similar investment options available. Which is
best?
The funds are listed in rough order of our overall preference.
Preferences are listed separately for use in
retirement accounts and for taxable accounts.
For a listing of our preferences in other asset classes, see
here.
Retirement Accounts (i.e., tax-deferred or tax-exempt accounts)
 | DFA Inflation-Protected Securities Portfolio (DIPSX). E/R: 0.11%.
This fund buys TIPS with maturities of five to twenty years.
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| Vanguard Inflation Protected Securities Fund Admiral Shares (VAIPX). E/R: 0.10%.
This fund invests in TIPS.
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| DFA Inflation-Protected Securities ETF (DFIP). E/R: 0.11%.
This ETF buys TIPS with maturities of five to twenty years.
|
| Fidelity Inflation-Protected Bond Index Fund (FIPDX). E/R: 0.05%.
This fund tracks the Barclays
U.S. Treasury Inflation-Protected Securities (TIPS) Index.
|
| Schwab Treasury Inflation Protected Securities Index Fund (SWRSX). E/R: 0.05%.
This fund tracks the Barclays U.S. Treasury Inflation-Protected Securities
(TIPS) Index.
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| Schwab US TIPS ETF (SCHP). E/R: 0.05%. This ETF
tracks the Barclay's US Government Inflation-Linked Index. For more information on
ETFs, see here.
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| DFA LTIP Portfolio (DRXIX). E/R: 0.15%.
This fund buys TIPS with greater than 20 year maturities. The longer
duration should amplify the diversification benefit of this fund (i.e., it
should decrease correlation with other asset classes).
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| PIMCO 15+ Year U.S. TIPS Index Fund (LTPZ). E/R: 0.20%.
This ETF tracks the Merrill Lynch 15+ Year US Inflation-Linked Treasury Index
of long-term TIPS. The longer duration should amplify the
diversification benefit of this fund (i.e., it should decrease correlation
with other asset classes). For more information on ETFs, see here.
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| SPDR Barclays TIPS ETF (IPE). E/R: 0.15%. This ETF
tracks the Barclay's US Government Inflation-Linked Index. For more information on
ETFs, see here.
|
| Vanguard Inflation Protected Securities Fund (VIPSX). E/R: 0.20%.
This fund invests in TIPS.
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| iShares Barclays US TIPS Fund (TIP). E/R: 0.20%. This ETF
tracks the Barclays US Treasury Inflation Bond Index. For more information on
ETFs, see here.
|
| PIMCO Broad U.S. TIPS Index Fund (TIPZ). E/R: 0.20%.
This ETF tracks the Merrill Lynch US Inflation-Linked Treasury Index.
For more information on ETFs, see here. |
| DFA Municipal Real Return Portfolio (DMREX). E/R: 0.23%.
This fund buys zero-coupon inflation swaps (with maturities greater than 12
months) and invests collateral in short- and intermediate- term municipal
bonds. So the muni-bond portion of the portfolio will be federal
income tax free, while any net gains from the inflation protection portion
will qualify as long-term capital gains.
|
| DFA Inflation-Protected Securities ETF (DFIP). E/R: 0.11%.
This ETF buys TIPS with maturities of five to twenty years.
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| Schwab US TIPS ETF (SCHP). E/R: 0.07%. This ETF
tracks the Barclay's US Government Inflation-Linked Index. For more information on
ETFs, see here.
|
| PIMCO 15+ Year U.S. TIPS Index Fund (LTPZ). E/R: 0.20%.
This ETF tracks the Merrill Lynch 15+ Year US Inflation-Linked Treasury Index
of long-term TIPS. The longer duration should amplify the
diversification benefit of this fund (i.e., it should decrease correlation
with other asset classes). For more information on ETFs, see here.
|
| DFA Inflation-Protected Securities Portfolio (DIPSX). E/R: 0.11%.
This fund buys TIPS with maturities of five to twenty years. Because of
the "buy and hold" nature of DFA fund investors, we expect that this fund will
be very capital-gains tax efficient.
|
| Vanguard Inflation Protected Securities Fund Admiral Shares (VAIPX). E/R: 0.10%.
This fund invests in TIPS.
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| Fidelity Inflation-Protected Bond Index Fund (FIPDX). E/R: 0.05%.
This fund tracks the Barclays
U.S. Treasury Inflation-Protected Securities (TIPS) Index.
|
| Schwab Treasury Inflation Protected Securities Index Fund (SWRSX). E/R: 0.05%.
This fund tracks the Barclays U.S. Treasury Inflation-Protected Securities
(TIPS) Index.
|
| DFA LTIP Portfolio (DRXIX). E/R: 0.15%.
This fund buys TIPS with greater than 20 year maturities. The longer
duration should amplify the diversification benefit of this fund (i.e., it
should decrease correlation with other asset classes).
|
| SPDR Barclays TIPS ETF (IPE). E/R: 0.15%. This ETF
tracks the Barclay's US Government Inflation-Linked Index. As an
ETF, this fund is expected to be more (capital gains) tax-efficient than the
non-ETFs listed here. However, this asset class isn't expected to
generate very high capital gains distributions in the first place. For
more information on ETFs, see here.
|
| iShares Barclays US TIPS Fund (TIP). E/R: 0.20%. This ETF
tracks the Barclays US Treasury Inflation Bond Index. As an
ETF, this fund is expected to be more (capital gains) tax-efficient than the non-ETFs
listed here. However, this asset class isn't expected to generate very
high capital gains distributions in the first place. For more information on ETFs, see here.
|
| PIMCO Broad U.S. TIPS Index Fund (TIPZ). E/R: 0.20%.
This ETF tracks the Merrill Lynch US Inflation-Linked Treasury Index.
For more information on ETFs, see here.
|
| Vanguard Inflation Protected Securities Fund (VIPSX). E/R: 0.20%.
This fund invests in TIPS. |
This web page contains the current opinions of Eric E. Haas at the time it is
written—and such opinions are subject to change
without notice. This web page is intended to serve two purposes:
| To educate the public; and |
| To provide disclosure of Mr. Haas' opinions to prospective clients.
We believe that prospective clients are well-served by being made aware of
what they are buying—and what they are buying is advice
that is based on these opinions. |
We believe the information provided here to be useful and accurate at the time
it is written.
Information contained herein has been obtained from sources believed to be
reliable, but is not guaranteed.
No investor should invest solely on the basis of information listed here.
Before investing, it is important to consult each prospective investment's
prospectus and consider both its risk/return characteristics and its effect on
your overall portfolio.
This information is not intended to be a
substitute for specific individualized tax, legal, or investment planning
advice. Where specific advice is necessary or appropriate, Altruist
recommends consultation with a qualified tax adviser, CPA, financial planner, or
investment adviser. If you would like to discuss the rationale or support
for any particular idea expressed on this web page, feel free to
contact us. |
