The iShares TIPS Bond ETF (TIP) and the Schwab U.S. TIPS ETF (SCHP) are both exchange-traded funds that provide investors with exposure to U.S. Treasury Inflation-Protected Securities (TIPS). While they share a similar investment focus, there are distinctions between the two that may influence an investor's choice. Below is a detailed comparison:
1. Fund Overview
| Aspect | TIP | SCHP |
|---|---|---|
| Issuer | iShares (BlackRock) | Charles Schwab |
| Inception Date | December 4, 2003 | August 5, 2010 |
| Expense Ratio | 0.19% | 0.03% |
| Assets Under Management (AUM) | Approximately $13.9 billion | Approximately $11.9 billion |
| Underlying Index | ICE U.S. Treasury Inflation Linked Bond Index | Bloomberg US Treasury Inflation Protected Notes (TIPS) Index |
SCHP offers a lower expense ratio compared to TIP.
2. Portfolio Composition
| Metric | TIP | SCHP |
|---|---|---|
| Number of Holdings | 48 | 49 |
| Top Holdings | U.S. Treasury TIPS 1.875% 15-JUL-2034 (4.04%)U.S. Treasury TIPS 1.75% 15-JAN-2034 (3.84%)U.S. Treasury TIPS 1.125% 15-JAN-2033 (3.56%) | U.S. Treasury TIPS 1.875% 15-JUL-2034 (4.04%)U.S. Treasury TIPS 1.75% 15-JAN-2034 (3.84%)U.S. Treasury TIPS 1.125% 15-JAN-2033 (3.56%) |
Both ETFs have similar holdings, reflecting their focus on U.S. TIPS.
3. Performance Metrics
| Time Period | TIP | SCHP |
|---|---|---|
| Year-to-Date (YTD) | 3.84% | 3.64% |
| 1 Year | 5.92% | 6.09% |
| 5 Years (Annualized) | 1.57% | 1.72% |
| 10 Years (Annualized) | 2.46% | 2.55% |
SCHP has slightly outperformed TIP over longer time horizons.
4. Dividend Yield
| Metric | TIP | SCHP |
|---|---|---|
| Dividend Yield (TTM) | 2.43% | 2.88% |
SCHP offers a higher trailing twelve-month dividend yield compared to TIP.
5. Risk Metrics
| Metric | TIP | SCHP |
|---|---|---|
| Standard Deviation | 4.39% | 4.40% |
| Sharpe Ratio | 1.51 | 1.54 |
| Max Drawdown | -14.56% | -14.26% |
Both ETFs exhibit similar risk profiles, with comparable standard deviations and drawdowns.
6. Liquidity
| Metric | TIP | SCHP |
|---|---|---|
| Average Daily Volume | Approximately 2.02 million shares | Approximately 3.10 million shares |
SCHP has a higher average daily trading volume, indicating greater liquidity.
Conclusion
Both TIP and SCHP provide investors with exposure to U.S. Treasury Inflation-Protected Securities. SCHP offers a lower expense ratio and has slightly outperformed TIP over longer periods, coupled with a higher dividend yield and greater liquidity. Investors should consider these factors alongside their individual investment objectives and preferences when choosing between these ETFs.