Investors Switch From iShares to Vanguard TIPS ETF

Senior ETF Analyst

Aug 22, 2023

Reviewed by: Lisa Barr

Edited by: Lisa Barr

There’s been a big reshuffling in TIPS exchange-traded funds. On Monday, investors pulled $795 million out of the iShares 0-5 Year TIPS Bond ETF (STIP), its largest single-day outflow ever, according to data from Bloomberg.

At the same time, investors put $756 million into the Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), its largest inflow ever.

The matching inflows and outflows suggest that one entity was responsible for the shifting of assets. Perhaps there was a tweak in a model portfolio, or a large institutional investor jumped from one ETF to the other.

Both the $10.9 billion STIP and the $13.3 billion VTIP offer extremely similar exposure.

VTIP tracks the Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0–5 Year Index, while STIP tracks the ICE US Treasury 0-5 Year Inflation Linked Bond Index.

STIP has returned 18.3% over the past 10 years, while VTIP has returned 17.8%. Over the past five years, STIP is up 14.4% versus 14% for VTIP.

STIP has an expense ratio of 0.03%, while VTIP has an expense ratio of 0.04%.

Year-to-Date Outflows From TIPS ETFs

Though Monday’s flows kept assets in TIPS ETFs largely unchanged, investors have been pulling money out of such funds for most of 2023.

On net, $9.7 billion has exited funds that hold Treasury inflation-protected securities, or bonds that compensate investors based on the rate of inflation.

Along with STIP and VTIP, which have year-to-date outflows of $3.1 billion and $2.2 billion, respectively, investors have taken $2.3 billion out of the Schwab US TIPS ETF (SCHP).

The outflows suggest that investors aren’t as worried about inflation as they were last year. The Consumer Price Index for All Urban Consumers—which is the index used to calculate returns for TIPS—grew by 3.2% year over year in July, down sharply from last year’s 9.1% peak.

For context, investors added a whopping $11.7 billion into STIP, $10.6 billion into VTIP and $7.2 billion into SCHP between 2020 and 2022.

Sumit Roy

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Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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