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Vanguard launches Short-Term TIPS Index Fund and ETF


Vanguard has launched the Vanguard Short-Term Inflation-Protected Securities Index Fund, which offers low-cost conventional shares (investor, admiral and institutional) and ETF shares.

The estimated expense ratios of the four share classes range from 0.07 per cent to 0.20 per cent. The Treasury inflation-protected securities fund and ETF categories have average expense ratios of 0.82 per cent and 0.20 per cent, respectively.

The new fund seeks to track the performance of the Barclays US Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, a market-weighted index that measures the performance of inflation-protected public obligations of the US Treasury that have a remaining maturity of less than five years. The benchmark index has an average duration of 2.71 years and an average maturity of 2.76 years.

“Vanguard believes TIPS can serve a valuable role in a well-balanced portfolio as an inflation hedge and diversifier. The Short-Term Inflation Protected Securities Index Fund was developed for investors seeking inflation protection with the potential for less volatility than other inflation hedges, including stocks, longer-term TIPS, gold, and REITs,” says Vanguard chief investment officer Gus Sauter (pictured).

The short-term fund is a complement to the USD44.3bn Vanguard Inflation-Protected Securities Fund, a broad-market TIPS fund with an average duration of 8.5 years and an average maturity of 9.4 years.

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