TIPS mutual funds don't work well for me. These are the reasons I prefer long term TIPS purchased on the secondary market:
---I was able to lock in a real rate (2.54%) for a longer period of time (~25 years). I just prefer to have one portion of my portfolio that is as risk free as possible, for as long as possible.
---Bonds have had decades long stretches with negative real returns, so I prefer to lock in a half-way decent real rate for 25 years and eliminate that as something else hanging over my head. If real rates rise, I'll wish I had waited, but they may never rise above 2.5% in my lifetime. With a fund I'm exposed to whatever real rates the market dishes out in the years to come. Actually, I think I could make it on a 2.5% real return.
---With a fund I'm exposed to market risk, management risk, and annual expenses. With individual TIPS I can avoid market risk by holding to maturity, a manager can't mess up and leave me holding the bag, and I have a one-time nominal brokerage fee, instead of an annual percentage bite out of my assets.
---If I buy on the secondary market I can get bonds that yield 3.875%. Even though the yield to maturity on my TIPS is 2.54%, I will actually receive ~3.2% (real) in income relative to my initial investment. I'd rather receive more income annually and commensurately less in the end. It will enable me avoid selling bonds as I go.
The major risks I run are these:
---Deflation. I'm guaranteed to get the original auction price of the bond at maturity, not what I paid. Nevertheless, I'd still get my inflation adjusted income for 25 years - even in a deflationary scenario. Actually, I'm more concerned about inflation going forward.
---CPI manipulation. This is probably going on to some extent, but I think it's a relatively small risk compared to the risks I'd face elsewhere.
---I run the risk that real rates will rise. But that won't hurt me if I hold to maturity, which I plan to do. If real rates rise above 2.5%, my net worth would decline on paper, but my inflation adjusted income would continue as always, and I get the initial investment back at maturity, regardless of the market price at that time.
Anyway, this is just another viewpoint. With all my particulars, long term TIPS on the secondary market work well.