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Invest With An Edge

STIP: A Short-Term TIPS ETF From iShares

The iShares Barclays 0-5 Year TIPS Bond Fund (STIP) from Blackrock began trading last Friday (12/03/10). The new ETF targets the short end of the TIPS curve by seeking to track the Barclays Capital U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Years Index (Series-L).

The STIP fact sheet (pdf) indicates 13 holdings and an effective duration of 1.38 years. I expect the distribution yield to come in below 1% after subtracting the 0.20% expense ratio. Additional information is in the overview, press release, and prospectus (pdf).

STIP faces competition from PIMCO 1-5 Year TIPS Index Fund (STPZ). STPZ launched in August of 2009, has amassed $645 million in assets, and has the same 0.20% expense ratio. The new iShares STIP claims to be the only ETF offering exposure to the very shortest end of the curve (zero to one year) as its 0-5 year range is broader than STPZ’s 1-5 year range.

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