PIMCO Broad U.S. TIPS Index Exchange-Traded Fund (ARCA: TIPZ)

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PIMCO Broad U.S. TIPS Index Exchange-Traded Fund

The fund invests at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities of the ICE BofA US Inflation-Linked Treasury Index (the underlying index). The underlying index is an unmanaged index comprised of Treasury Inflation-Protected Securities (TIPS).

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When inflation moves higher, fixed income investors often turn to Treasury Inflation-Protected Securities, a corner of the bond market easily accessible via exchange traded funds.
TIPS, which are viewed as a low-risk investment, are indexed to inflation. The par value of TIPS rises with increases in the Consumer Price Index. Interest rates on TIPS are fixed and yields on these bonds and the related ETFs are usually low relative to other fixed income assets.
Recent data from the Commerce Department indicates U.S. consumer prices are inching higher, meaning it could be time for investors to consider ETFs such as the PIMCO 1-5 Year U.S. TIPS Index Exchange-Traded Fund (NYSE: <a class="ticker" href="/stock/stpz#NYSE">STPZ</a>). STPZ, which is over eight years old, follows the BofA Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index.
<h3>
	Low Duration</h3>
STPZ has a duration of just over three years and the effective maturity of the ETF&#39;s 12 holdings is just 2.94 years.
&ldquo;The short maturity-focused mandate gives the portfolio a duration of 3.1 years (as of November 2017), which mitigates interest rate risk and provides a strong hedge against immediate inflation,&rdquo; said Morningstar <a href="http:// http://beta.morningstar.com/articles/841712/fight-inflation-with-this-low-cost-etf.html">in a recent note</a>. &ldquo;Gains and losses from price volatility are muted thanks to the strategy&#39;s short duration. As a result, this fund more closely tracks the realized inflation fluctuations over the short run than its longer duration counterparts do.&rdquo;
The $1-billion STPZ has a 30-day SEC yield of 1.64 percent. The Federal Reserve&#39;s gauge of inflation rose 0.2 percent in November and <a href="https://www.bloomberg.com/news/articles/2017-12-22/u-s-consumer-spending-tops-forecasts-as-inflation-accelerates">1.8 percent year-over-year</a>. The Fed is targeting inflation of 2 percent, a mark that has been missed for several years.
<h3>
	How STPZ Benefits</h3>
Obviously, rising inflation benefits a fund such as STPZ, but investors need to understand how those benefits are realized.
&ldquo;Break-even inflation is the rate that would equate the real return from regular U.S. Treasuries and TIPS with the same maturity,&rdquo; according to Morningstar. At the end of November 2017, the break-even inflation rate was 1.8 percent, which was 0.2 percent lower than the 10-year rolling break-even rate average of 2 percent. If actual inflation exceeds 1.8 percent, it would reward TIPS investors, but if it is lower than this threshold, U.S. Treasury bonds would come out ahead.&rdquo;
Other PIMCO inflation ETFs include the PIMCO Broad U.S. TIPS Index Exchange-Traded Fund (NYSE: <a class="ticker" href="/stock/tipz#NYSE">TIPZ</a>) and the PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (NYSE: <a class="ticker" href="/stock/ltpz#NYSE">LTPZ</a>).
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/12/10942734/unmatched-market-size-opportunity-in-chinese-internet-etfs">Surging China Internet ETFs</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/12/10942745/the-end-of-the-year-oil-trade-is-spreading-to-leveraged-etfs">Loving Leveraged Oil ETFs</a>

Bond giant PIMCO said in a statement today that it will introduce the Global Advantage Inflation-Linked Bond Strategy Fund on May 1. The new actively managed ETF will trade on the New York Stock Exchange under the ticker "ILB."

The Global Advantage Inflation-Linked Bond Strategy Fund is designed to offer investors the potential for long-term returns above inflation by actively managing global inflation-linked bonds and currencies under the ETF wrapper, according to a statement issued by PIMCO. The new fund is managed by Mihir Worah, Managing Director and Head of PIMCO's Real Return portfolio management team.

ILB's primary benchmark index is the Barclays Capital Universal Government Inflation-Linked Bond Index and its secondary benchmark index is the PIMCO Global Advantage Inflation-Linked Bond Index. 

PIMCO manages more than $100 billion in dedicated inflation hedging strategies, the California-based firm said in the statement.

PIMCO currently lists 18 ETFs, including TIPS products such as the PIMCO 1-5 Year US TIPS Index ETF (NYSE: <a class="ticker" href="/stock/stpz#NYSE">STPZ</a>) and the PIMCO Broad U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/tipz#NYSE">TIPZ</a>). In late February, the firm introduced the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>), the ETF equivalent of the Total Return Fund managed by Bill Gross. In less than two months of trading, BOND has accumulated more than $508 million in AUM. 

Follow me on Twitter: @ETFProfesor1

View tweet <a href="https://twitter.com/#!/PIMCO/statuses/190848886385033217">here</a>.

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Pimco's Gross: 'Consider TIPS for Cheap Inflation Protection'

iPath U.S. Treasury 10-year Bull ETN (NYSE: <a class="ticker" href="/stock/dtyl#NYSE">DTYL</a>) is up nearly 30% year to date. The investment seeks to replicate the performance of the Barclays Capital 10-Year U.S. Treasury Futures Targeted Exposure index, which is designed to increase in response to a decrease in 10-year Treasury note yields and to decrease in response to an increase in 10-year Treasury note yields.

FactorShares 2X: TBond Bull/S&amp;P500 Bear (NYSE: <a class="ticker" href="/stock/fsa#NYSE">FSA</a>) is up more than 24% year to date. The underlying index is a spread index reflecting the difference in daily return between the U.S. equity and interest rate market segments by tracking a long position in the front month E-mini S&amp;P 500 Stock Price index futures and a short position in the front month U.S. Treasury bond futures. 

Direxion Daily 7-10 Year Treasury Bull 3X Shares (NYSE: <a class="ticker" href="/stock/tyd#NYSE">TYD</a>) is up more than 22% since the beginning of the year. The investment seeks daily investment results of 300% of the price performance of the NYSE 7-10 Year U.S. Treasury Bond Index. The fund normally invests 80% of net assets in U.S. government securities and/or financial instruments, but also may hold money market instruments.

iPath U.S. Treasury Long Bond Bull ETN (NYSE: <a class="ticker" href="/stock/dlbl#NYSE">DLBL</a>) is up more than 19% year to date. The investment seeks to replicate the performance of the Barclays Capital Long Bond U.S. Treasury Futures Targeted Exposure index, which is designed to increase in response to a decrease in long-dated Treasury bond yields and to decrease in response to an increase in long-dated Treasury bond yields.

PIMCO 15+ Year U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/ltpz#NYSE">LTPZ</a>) is up more than 17% since the beginning of the year. The investment seeks to provide a total return that closely corresponds to the total return of the BofA Merrill Lynch 15+ Year U.S. Inflation-Linked Treasury Index, an unmanaged index comprised of Treasury Inflation Protected Securities with a maturity of at least 15 years.

ProShares Ultra 7-10 Year Treasury (NYSE: <a class="ticker" href="/stock/ust#NYSE">UST</a>) is up nearly 16% since the beginning of the year. The investment seeks daily investment results, before fees and expenses, and interest income earned on cash and financial instruments, that correspond to twice (200%) the daily performance of the Barclays Capital 7-10 Year U.S. Treasury Bond Index. It also invests in money market instruments.

PIMCO Build America Bond Strategy ETF (NYSE: <a class="ticker" href="/stock/babz#NYSE">BABZ</a>) is up more than 15% year to date. The fund invests in taxable municipal securities eligible to participate in the Build America Bonds program created under the American Recovery and Reinvestment Act of 2009 and other legislation. Top holdings include securities related to New York City Municipal Water, Los Angeles Department of Water &amp; Power and Metropolitan Washington DC Airports Authority. 

SPDR Nuveen Barclays Cap Build America Bond (NYSE: <a class="ticker" href="/stock/babs#NYSE">BABS</a>) is up more than 14% since the beginning of the year. The fund seeks to track the performance of the Barclays Capital Build America Bond Index, which represents securities that are taxable, dollar denominated, and issued by a U.S. state or territory. Top holdings include securities related to Clark County Nevada Airport and Bay Area Toll Authority. 

PowerShares Build America Bond (NYSE: <a class="ticker" href="/stock/bab#NYSE">BAB</a>) is up more than 13% year to date. The fund invests in taxable municipal securities eligible to participate in the Build America Bonds program created under the American Recovery and Reinvestment Act of 2009 and other legislation. Top holdings include securities related to Sioux Falls South Dakota, Lexington-Fayette Urban County and Chicago's O'Hare International Airport.

SPDR Nuveen Barclays Capital California Municipal Bond (NYSE: <a class="ticker" href="/stock/cxa#NYSE">CXA</a>) is up more than 11% year to date. The fund uses a passive management strategy designed to track the price and yield performance of the Barclays Capital Managed Money Municipal California Index. It also invests in futures, options, swap contracts and other derivatives, cash and cash equivalents or money market instruments. Top holdings include securities related to Los Angeles Unified School District. 

PIMCO Broad U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/tipz#NYSE">TIPZ</a>) is up about 11% since the beginning of the year. The investment seeks to provide a total return that closely corresponds to the total return of the BofA Merrill Lynch U.S. Inflation-Linked Treasury Index. It may also invest in futures, options, swap contracts and other derivatives, cash and investment grade, liquid short-term instruments. 

Vanguard Long-Term Bond Index ETF (NYSE: <a class="ticker" href="/stock/blv#NYSE">BLV</a>) is up nearly 11% year to date. The fund employs a passive investment approach designed to track the performance of the Barclays Capital U.S. Long Government/Credit Float Adjusted Index. It maintains a dollar-weighted average maturity consistent with that of the index. Top holdings include U.S. Treasury bonds.

Schwab U.S. TIPS ETF (NYSE: <a class="ticker" href="/stock/schp#NYSE">SCHP</a>) is up nearly 11% year to date. The underlying index includes all publicly-issued U.S. TIPS that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must be fixed-rate and non-convertible. 

iShares S&amp;P California AMT-Free Municipal Bond (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>) is up more than 10% year to date. The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the underlying index, which measures the performance of the investment grade segment of the California municipal bond market. Top holdings include securities related to San Diego Unified School District and Los Angeles Department of Airports.

SPDR Barclays Capital Long Corporate Term Bond (NYSE: <a class="ticker" href="/stock/lwc#NYSE">LWC</a>) is more than 10% higher year to date. The underlying index measures the performance of the long-term sector of the U.S. investment bond market, which includes investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds. Top holdings include AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) and Comcast (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>) bonds.

When inflation moves higher, fixed income investors often turn to Treasury Inflation-Protected Securities, a corner of the bond market easily accessible via exchange traded funds.
TIPS, which are viewed as a low-risk investment, are indexed to inflation. The par value of TIPS rises with increases in the Consumer Price Index. Interest rates on TIPS are fixed and yields on these bonds and the related ETFs are usually low relative to other fixed income assets.
Recent data from the Commerce Department indicates U.S. consumer prices are inching higher, meaning it could be time for investors to consider ETFs such as the PIMCO 1-5 Year U.S. TIPS Index Exchange-Traded Fund (NYSE:<a class="ticker" href="/stock/STPZ#NYSE">STPZ</a>). STPZ, which is over eight years old, follows the BofA Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index.
<h3>
	Low Duration</h3>
STPZ has a duration of just over three years and the effective maturity of the ETF&#39;s 12 holdings is just 2.94 years.
&ldquo;The short maturity-focused mandate gives the portfolio a duration of 3.1 years (as of November 2017), which mitigates interest rate risk and provides a strong hedge against immediate inflation,&rdquo; said Morningstar <a href="http:// http://beta.morningstar.com/articles/841712/fight-inflation-with-this-low-cost-etf.html">in a recent note</a>. &ldquo;Gains and losses from price volatility are muted thanks to the strategy&#39;s short duration. As a result, this fund more closely tracks the realized inflation fluctuations over the short run than its longer duration counterparts do.&rdquo;
The $1-billion STPZ has a 30-day SEC yield of 1.64 percent. The Federal Reserve&#39;s gauge of inflation rose 0.2 percent in November and <a href="https://www.bloomberg.com/news/articles/2017-12-22/u-s-consumer-spending-tops-forecasts-as-inflation-accelerates">1.8 percent year-over-year</a>. The Fed is targeting inflation of 2 percent, a mark that has been missed for several years.
<h3>
	How STPZ Benefits</h3>
Obviously, rising inflation benefits a fund such as STPZ, but investors need to understand how those benefits are realized.
&ldquo;Break-even inflation is the rate that would equate the real return from regular U.S. Treasuries and TIPS with the same maturity,&rdquo; according to Morningstar. At the end of November 2017, the break-even inflation rate was 1.8 percent, which was 0.2 percent lower than the 10-year rolling break-even rate average of 2 percent. If actual inflation exceeds 1.8 percent, it would reward TIPS investors, but if it is lower than this threshold, U.S. Treasury bonds would come out ahead.&rdquo;
Other PIMCO inflation ETFs include the PIMCO Broad U.S. TIPS Index Exchange-Traded Fund (NYSE:<a class="ticker" href="/stock/TIPZ#NYSE">TIPZ</a>) and the PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (NYSE:<a class="ticker" href="/stock/LTPZ#NYSE">LTPZ</a>).
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/12/10942734/unmatched-market-size-opportunity-in-chinese-internet-etfs">Surging China Internet ETFs</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/12/10942745/the-end-of-the-year-oil-trade-is-spreading-to-leveraged-etfs">Loving Leveraged Oil ETFs</a>

Bond giant PIMCO said in a statement today that it will introduce the Global Advantage Inflation-Linked Bond Strategy Fund on May 1. The new actively managed ETF will trade on the New York Stock Exchange under the ticker "ILB."

The Global Advantage Inflation-Linked Bond Strategy Fund is designed to offer investors the potential for long-term returns above inflation by actively managing global inflation-linked bonds and currencies under the ETF wrapper, according to a statement issued by PIMCO. The new fund is managed by Mihir Worah, Managing Director and Head of PIMCO's Real Return portfolio management team.

ILB's primary benchmark index is the Barclays Capital Universal Government Inflation-Linked Bond Index and its secondary benchmark index is the PIMCO Global Advantage Inflation-Linked Bond Index. 

PIMCO manages more than $100 billion in dedicated inflation hedging strategies, the California-based firm said in the statement.

PIMCO currently lists 18 ETFs, including TIPS products such as the PIMCO 1-5 Year US TIPS Index ETF (NYSE: <a class="ticker" href="/stock/stpz#NYSE">STPZ</a>) and the PIMCO Broad U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/tipz#NYSE">TIPZ</a>). In late February, the firm introduced the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>), the ETF equivalent of the Total Return Fund managed by Bill Gross. In less than two months of trading, BOND has accumulated more than $508 million in AUM. 

Follow me on Twitter: @ETFProfesor1

View tweet <a href="https://twitter.com/#!/PIMCO/statuses/190848886385033217">here</a>.

iPath U.S. Treasury 10-year Bull ETN (NYSE: <a class="ticker" href="/stock/dtyl#NYSE">DTYL</a>) is up nearly 30% year to date. The investment seeks to replicate the performance of the Barclays Capital 10-Year U.S. Treasury Futures Targeted Exposure index, which is designed to increase in response to a decrease in 10-year Treasury note yields and to decrease in response to an increase in 10-year Treasury note yields.

FactorShares 2X: TBond Bull/S&P500 Bear (NYSE: <a class="ticker" href="/stock/fsa#NYSE">FSA</a>) is up more than 24% year to date. The underlying index is a spread index reflecting the difference in daily return between the U.S. equity and interest rate market segments by tracking a long position in the front month E-mini S&P 500 Stock Price index futures and a short position in the front month U.S. Treasury bond futures. 

Direxion Daily 7-10 Year Treasury Bull 3X Shares (NYSE: <a class="ticker" href="/stock/tyd#NYSE">TYD</a>) is up more than 22% since the beginning of the year. The investment seeks daily investment results of 300% of the price performance of the NYSE 7-10 Year U.S. Treasury Bond Index. The fund normally invests 80% of net assets in U.S. government securities and/or financial instruments, but also may hold money market instruments.

iPath U.S. Treasury Long Bond Bull ETN (NYSE: <a class="ticker" href="/stock/dlbl#NYSE">DLBL</a>) is up more than 19% year to date. The investment seeks to replicate the performance of the Barclays Capital Long Bond U.S. Treasury Futures Targeted Exposure index, which is designed to increase in response to a decrease in long-dated Treasury bond yields and to decrease in response to an increase in long-dated Treasury bond yields.

PIMCO 15+ Year U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/ltpz#NYSE">LTPZ</a>) is up more than 17% since the beginning of the year. The investment seeks to provide a total return that closely corresponds to the total return of the BofA Merrill Lynch 15+ Year U.S. Inflation-Linked Treasury Index, an unmanaged index comprised of Treasury Inflation Protected Securities with a maturity of at least 15 years.

ProShares Ultra 7-10 Year Treasury (NYSE: <a class="ticker" href="/stock/ust#NYSE">UST</a>) is up nearly 16% since the beginning of the year. The investment seeks daily investment results, before fees and expenses, and interest income earned on cash and financial instruments, that correspond to twice (200%) the daily performance of the Barclays Capital 7-10 Year U.S. Treasury Bond Index. It also invests in money market instruments.

PIMCO Build America Bond Strategy ETF (NYSE: <a class="ticker" href="/stock/babz#NYSE">BABZ</a>) is up more than 15% year to date. The fund invests in taxable municipal securities eligible to participate in the Build America Bonds program created under the American Recovery and Reinvestment Act of 2009 and other legislation. Top holdings include securities related to New York City Municipal Water, Los Angeles Department of Water & Power and Metropolitan Washington DC Airports Authority. 

SPDR Nuveen Barclays Cap Build America Bond (NYSE: <a class="ticker" href="/stock/babs#NYSE">BABS</a>) is up more than 14% since the beginning of the year. The fund seeks to track the performance of the Barclays Capital Build America Bond Index, which represents securities that are taxable, dollar denominated, and issued by a U.S. state or territory. Top holdings include securities related to Clark County Nevada Airport and Bay Area Toll Authority. 

PowerShares Build America Bond (NYSE: <a class="ticker" href="/stock/bab#NYSE">BAB</a>) is up more than 13% year to date. The fund invests in taxable municipal securities eligible to participate in the Build America Bonds program created under the American Recovery and Reinvestment Act of 2009 and other legislation. Top holdings include securities related to Sioux Falls South Dakota, Lexington-Fayette Urban County and Chicago's O'Hare International Airport.

SPDR Nuveen Barclays Capital California Municipal Bond (NYSE: <a class="ticker" href="/stock/cxa#NYSE">CXA</a>) is up more than 11% year to date. The fund uses a passive management strategy designed to track the price and yield performance of the Barclays Capital Managed Money Municipal California Index. It also invests in futures, options, swap contracts and other derivatives, cash and cash equivalents or money market instruments. Top holdings include securities related to Los Angeles Unified School District. 

PIMCO Broad U.S. TIPS Index ETF (NYSE: <a class="ticker" href="/stock/tipz#NYSE">TIPZ</a>) is up about 11% since the beginning of the year. The investment seeks to provide a total return that closely corresponds to the total return of the BofA Merrill Lynch U.S. Inflation-Linked Treasury Index. It may also invest in futures, options, swap contracts and other derivatives, cash and investment grade, liquid short-term instruments. 

Vanguard Long-Term Bond Index ETF (NYSE: <a class="ticker" href="/stock/blv#NYSE">BLV</a>) is up nearly 11% year to date. The fund employs a passive investment approach designed to track the performance of the Barclays Capital U.S. Long Government/Credit Float Adjusted Index. It maintains a dollar-weighted average maturity consistent with that of the index. Top holdings include U.S. Treasury bonds.

Schwab U.S. TIPS ETF (NYSE: <a class="ticker" href="/stock/schp#NYSE">SCHP</a>) is up nearly 11% year to date. The underlying index includes all publicly-issued U.S. TIPS that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must be fixed-rate and non-convertible. 

iShares S&P California AMT-Free Municipal Bond (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>) is up more than 10% year to date. The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the underlying index, which measures the performance of the investment grade segment of the California municipal bond market. Top holdings include securities related to San Diego Unified School District and Los Angeles Department of Airports.

SPDR Barclays Capital Long Corporate Term Bond (NYSE: <a class="ticker" href="/stock/lwc#NYSE">LWC</a>) is more than 10% higher year to date. The underlying index measures the performance of the long-term sector of the U.S. investment bond market, which includes investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds. Top holdings include AT&T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) and Comcast (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>) bonds.

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