Vanguard Short-Term Inflation-Protected Securities Index Fund (NASDAQ:VTIP) is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The manager attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the index, holding each security in approximately the same proportion as its weighting in the index.
The Vanguard Short-Term Inflation-Protected Securities ETF follows the Bloomberg U. S. Treasury TIPS 0–5-year index. This benchmark tracks Treasury Inflation Protected Securities with less than five years to maturity.
- Net Assets: 55.53 billion
- NAV: 46.70
- Yield: 6.33%
- Expense Ratio: 0.04%
VTIP is a low-fee U.S. inflation bond fund that’s designed to offer investors cash flow, appreciation and capital preservation, all with an eye to minimizing the impact of inflation. The interest rate on individual TIPS owned by the fund is set when the bonds are issued. Dividends are paid quarterly on the inflation-adjusted value of the bonds.
The shorter-term bonds in this fund are protected from default by the federal government, while the principal value of the bonds adjusts semi-annually based on the Consumer Price Index (CPI). As inflation increases, or decreases, so will the principal value of the bonds within the fund.