New iShares TIPS ETFs with defined maturity date

[kevink]

Thought this might be of interest to some here. Well-known financial advisor Allan Roth along with David Enna at TipsWatch and a few others have been calling for firms to come up with TIPS ETFs that essentially allow investors to build a TIPS ladder without the big bid:ask spreads, trade execution hassles and (last not least) phantom income tax reporting issues of buying individual bonds.

BlackRock just responded and the products are getting enthusiastic reviews from Roth and several other on the Bogleheads forums. The only bad news, it appears, is that so far anyway they are only offering bonds going out 10 years, but even that could be invaluable, especially for an early retiree looking to bridge to taking Social Security at 70.

https://www.businesswire.com/news/home/20230921646329/en/BlackRock-Expands-iShares®-iBonds-®-ETF-Franchise-with-TIPS-ETF-Suite

 

[RunningBum]

From another thread, Roth writes about it here:
https://www.etf.com/sections/features/case-blackrocks-new-defined-maturity-tips-etfs

This does seem worthy of its own thread. Thanks for opening one.

 

[djsander]

What is the downside of these? I’m curious and know just enough to get in trouble. I appreciate any information that might be useful. Thanks!

 

[big-papa]

What is the downside of these? I’m curious and know just enough to get in trouble. I appreciate any information that might be useful. Thanks!

Downsides include
- They have an e/r so more expensive than building a TIPS ladder. e/r is currently 0.1%
- Their usage is limited because you can only build a ladder of these ETFS up to 10 years out.
- Being brand new the AUM of each of these are pretty small.

I wouldn't be surprised if Invesco also introduces something like this since they have competing ETFs (Bulletshares) for other bond-ladder types.

What might be interesting would be a complete ladder wrapped up in a single ETF. Perhaps a family of these set up with fixed end dates in 5 year increments...

Cheers

 

[djsander]

Downsides include
- They have an e/r so more expensive than building a TIPS ladder. e/r is currently 0.1%
- Their usage is limited because you can only build a ladder of these ETFS up to 10 years out.
- Being brand new the AUM of each of these are pretty small.

I wouldn't be surprised if Invesco also introduces something like this since they have competing ETFs (Bulletshares) for other bond-ladder types.

What might be interesting would be a complete ladder wrapped up in a single ETF. Perhaps a family of these set up with fixed end dates in 5 year increments...

Cheers

Thanks, the er of .1% is ok with me as is only the 10 year ladder.

 

[Phroig]

Negligible volume, but spreads at only 2-3 cents are not bad.

 

[foxfirev5]

Now that my 10 year TIPS ladder is in place I guess I'll just keep buying my annual allotment from the January auction. Same number of holdings and transactions with zero ER. If I were just starting out I would consider the ETF's.