Inflation protection with TIPS ETF.

Currently we have low interest rates globally and with minimum inflation or somewhere with deflation. How to invest money in times when prices will start growing again? There are so called Treasury Inflation Protected Securities or TIPS. Coupon payments, which are paid twice a year, are adjusted by changes in CPI (consumer price index).

TIPS are being offered with different maturities with 5 years, 10 years and 20 years. Also all exchange traded funds underlying TIPS cover full range of duration. The shortest TIPS fund has the appealing feature of being fully indexed to inflation with lower interest rate exposure than longer-duration TIPS funds.

There is only on TIPS ETF with exposure outside the US. The fund is called SPDR DB International Government Inflation-Protected Bond ETF (WIP). Strong diversification with 17 countries and 14 currencies provide safe investment against weakening US dollar and rising inflation globally. On average WIP has rates at 9-10 years. Expense ratio is 0,50% which is doubled compared to US but still not to much taking into consideration broad international access. Regionally fund covers all continents and emerging markets make 30% of its holdings. Included emerging countries are Brazil, South Korea, Mexico, Chile, Israel, South Africa, Turkey and Poland.