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It Pays to Be Picky With TIPS ETFs

BY | ETF Database
5:09 am ET 10/19/26 | 14 VIEWS
The Federal Reserve is engaged in a well-documented battle with high inflation. So, many advisors and fixed income investors are evaluating Treasury inflation-protected securities (TIPS) and related ETFs.That group includes the Invesco 0-5 Yr US TIPS ETF (PBTP C). The fund turned nine years old in September and tracks the ICE BofAML 0-5 Year US Inflation-Linked Treasury Index. It’s 25 holdings must have maturities of at least one month but no more than five years. At a time when investors are searching for income and inflation protection, the $244.8 million PBTP may be ready for its turn in the bond ETF limelight. “They’re (TIPS) very, very low risk on the credit front. And like a lot of Treasury bonds, they’re issued in different maturities,” noted Morningstar’s Daniel Sotiroff. “So, typically five, 10, or 30 years is what the Treasury will issue them in. And then obviously as time goes on, their maturity is going to wind down. So, you can find stuff out there on the secondary market at a shorter maturity or a shorter time till they terminate.”TIPS ETF PBTP Is Pertinent TodayArguably unheralded among TIPS ETF, PBTP merits more attention in the current. That’s because it checks a variety of desirable boxes. For example, investors want to strike the delicate balance of mitigating interest rate risk while maintaining solid income streams. PBTP delivers on those fronts, as highlighted by an effective duration of just 2.32 years and a 30-day SEC yield of 4.05%. Those benefits are delivered with a portfolio where all of the components are rated “AA.” That confirms credit risk is minimal with this ETF.Most-Coveted SuiteAdditionally, PBTP’s in the suite of the TIPS bond investors are coveting most this year — those with low duration. And index-tracking has proven to be a valuable approach to this corner of the bond market. “So far this year, a lot of the money is going into ETFs that are targeting short-term TIPS. So, those in the zero- to five-year sort of range,” added Sotiroff. Much of this year’s enthusiasm for TIPS ETFs is directed to low-cost funds. PBTP answers that call as well. That’s because its annual expense ratio is just 0.07%, or $7 on a $10,000 investment. For more news, information, and analysis, visit the Innovative ETFs Content Hub.Invesco Distributors, Inc. is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Invesco Distributors, Inc., nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles. Invesco Distributors, Inc. does not provide legal or tax advice. This information is provided for general educational purposes only and is not to be considered legal or tax advice. Investors should consult with their legal or tax advisors for personalized assistance, including information regarding any specific state law requirements.

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