Vanguard Rolls Out TIPS ETF

January 02, 2013

 

Vanguard in mid-October launched a short-term inflation-protected securities index fund that includes an ETF share class that would compete with similar products from providers such as Pimco and iShares.

The Vanguard Short-Term Inflation-Protected Securities Index Fund (NasdaqGM: VTIP) tracks the Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, and invests in inflation-protected U.S. Treasury securities that have a remaining maturity of less than five years.

That index is the same benchmark San Francisco-based iShares uses for its $365 million iShares Barclays 0-5 Year TIPS Bond Fund (NYSE Arca: STIP), which comes with an annual expense ratio of 0.20 percent. Vanguard’s VTIP ETF has an annual expense ratio of 0.10 percent.

VTIP also undercuts the price tag of 0.20 percent for the $994 million Pimco 1-5 Year U.S. TIPS Index Fund (NYSE Arca: STPZ). But the Schwab U.S. TIPS ETF (NYSE Arca: SCHP) remains the cheapest in the space, at 0.07 percent.

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