State Street Launches TIPS, Global Dividend ETFs
Plus, yet another hedged junk-bond ETF comes to market, VIG's fee falls further, ProShares announces 7 ETF share splits and 8 reverse splits, and First Trust to renovate its strategic value ETF.
On Thursday, May 30, State Street rolled out a pair of exchange-traded funds devoted to global dividend-paying stocks and to a specific maturity band of Treasury Inflation-Protected Securities.
Both new ETFs follow strategies where there is plenty of competition. As its name would suggest, SPDR Barclays 1-10 Year TIPS ETF (TIPX) tracks a Barclays index of TIPS bonds with a remaining maturity of between one and 10 years. It's the latest entrant in a field that now has 15 TIPS ETFs. The appeal of a TIPS ETF is when the break-even rate of inflation is below average. When that happens, that suggests that TIPS may be cheap compared with Treasury securities of similar maturities. Right now, the 10-year break-even rate is about 2.5%, which is above the trailing 10-year average but below the long-term average rate of inflation. For investors who think inflation will outpace consensus, TIPS ETFs might be a good inexpensive way to gain inflation protection.
Robert Goldsborough does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.