Buy Inflation Insurance With These ETF’s (TIP, IPE, UDN, WIP)

inflation1“Long-term inflation is a given. In the short term, the question is severity. Luckily, there are a few ways for investors to protect their portfolios from its cold hand. In 1997, the U.S. created Treasury Inflation Protected Securities (TIPS). These bonds, backed by the full faith and credit of the federal government, provide a fixed coupon plus a rate that is adjusted based on changes in the Consumer Price Index. This prevents erosion of purchasing power. The easiest way to add TIPS bonds to your portfolio is through exchange traded funds. There are two ETFs that provide exposure, the biggest being the iShares Barclays TIPS Bond (TIP), with nearly $15 billion in assets, followed by the SPDR Barclays Capital TIPS (IPE) with $301 million. Both funds provide some benefits over individual TIPS, including the payment of monthly dividends over the bonds semi-annual payments. The funds charge 0.2% and 0.18% in expenses, respectively, and each yield around 2%,” Aaron Levitt Reports From Investopedia.

“Other nations have followed suit with the success of the TIPS product. The SPDR DB Intl Government Inflation-Protected Bond (WIP) gives investors a chance to diversify their inflation investments outside the United States. Top holdings include inflation bonds from France, Poland, Mexico and Japan,” Levitt Reports.
 
“Adding protection for a continuing falling dollar is another inflation insurance device. The PowerShares DB U.S. Dollar Index Bearish ETF (UDN) is designed to duplicate the performance of being short the U.S. dollar against a basket of foreign currencies. These include the, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, Swiss Franc and a nearly 57% weighting in the Euro. The fund allows investors to make a direct and decisive bet that the greenback will go down. The fund is up around 2% year-to-date, and charges 0.55% in expenses,” Levitt Reports.

Full Story: HERE

We have Listed Some details on all the inflation protection ETF’s below:

The investment (TIP) seeks results that correspond generally to the price and yield performance of the inflation-protected sector of the United States Treasury market as defined by the Barclays Capital U.S. TIPS index. The fund invests at least 90% of the assets in the inflation-protected bonds of its underlying index and at least 95% if the assets in U.S. government bonds. It may also invest up to 10% of assets in U.S. government bonds not included in the underlying index. The fund invests up to 5% of assets in repurchase agreements collateralized by U.S. government obligations and in cash and cash equivalents.

Chart for iShares Barclays TIPS Bond (TIP)

The investment (IPE) seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of an index that tracks the inflation protected sector of the United States Treasury market. The fund uses a passive management strategy designed to track the total return performance of the Barclays U.S. Government Inflation-linked Bond index. The U.S. Treasury TIPS index measures the performance of inflation protected public obligations of the U.S. Treasury. It is nondiversified.

Chart for SPDR Barclays Capital TIPS (IPE)

The investment (WIP) seeks to replicate, net of expenses, the DB Global Government ex-US Inflation-Linked Bond Capped Index. The fund normally invests at least 80% of total assets in fixed-income securities that comprise the index. It generally concentrates its investments (i.e., hold 25% or more of its total assets) in a particular industry or sector to approximately the same extent that its benchmark index is so concentrated. The fund is non-diversified.

Chart for SPDR DB Intl Govt Infl-Protected Bond (WIP)

The investment (UDN) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Short US Dollar Futures index. The index is comprised solely of short futures contracts. The futures contract is designed to replicate the performance of being short the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Chart for PowerShares DB US Dollar Index Bearish (UDN)

 

GET A FREE TREND ANALYSIS  FOR ANY ETF HERE!


Leave a Reply

Your email address will not be published. Required fields are marked *