PIMCO 15+ Year US TIPS ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy merits an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable underweight position in AA rated bonds and has a considerable overweight in government bonds compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

PIMCO 15+ Year US TIPS ETF earns an Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The main driver of the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by the fund's mediocre long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks to provide total return that closely corresponds, before fees and expenses, and to the total return of the ICE BofA 15+ Year U.S. Inflation-Linked Treasury Index.  The fund invests at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities of the ICE BofA 15+ Year U.S. Inflation-Linked Treasury Index (the "underlying index"). The underlying index is an unmanaged index comprised of Treasury Inflation-Protected Securities ("TIPS") with a maturity of at least 15 years.  

 This strategy has a modest 3.8% 12-month yield, lower than its average peers' 4.7%. It also has a 0.2% 30-day SEC yield (a measure similar to yield-to-maturity). A lower yield tends to indicate lower credit risk. The portfolio holds assets with a higher average surveyed credit quality of AAA, compared with the category average of A, and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies that take on less credit risk can often shoulder more-adverse market conditions. In terms of interest-rate risk, compared with others in the Inflation-Protected Bond category, this fund maintains a significantly elevated average effective duration of 19.1 years compared to the category's 6.1 years. The longer a strategy's duration, the more sensitive it is to shifts in interest rates. This fund, with a 19.1-year duration, is expected to gain 19.1% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

Average

Process

PIMCO 15+ Year US TIPS ETF benefits considerably from its fixed income team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Daniel He, Matthew Dorsten, Tanuj Dora. Experience on the team is abundant, with 10 years of average portfolio management experience. Together, they manage a total of three strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

Some concerns notwithstanding, Pimco's massive resources--both capital and human--and its laser ‎focus on excellence merit an Above Average Parent rating.‎
True, Pimco could be better on pricing. Shareholders, particularly in Europe, haven't enjoyed the ‎economies of scale that they could given Pimco's massive asset base. The firm, however, believes its ‎pricing is fair based on what it consistently delivers for investors, and it's hard to argue that's not the ‎case.‎
Pimco has generally enjoyed great success with its intense working culture, even if departures are a ‎byproduct of that intensity and can sometimes dim the near-term outlook on strategies. Yet, more ‎often than not, Pimco draws on its legion of skilled people and positions the next generation to ‎thrive.
CIO Dan Ivascyn and CEO Manny Roman ‎represent that next generation and have built on the organizational strengths they inherited. An experienced and critical-thinking investor, ‎Ivascyn has sought to curate an elite staff and capable investment culture since he assumed his ‎current role in 2014 and since Roman joined him in 2016. They have significantly grown the firm's pool ‎of investment professionals and supported them by spending massively on technology and ‎technologists to spur persistent outperformance while keeping risk in check. There may be a few others in Pimco's league, but very few.‎

Parent

PIMCO 15+ Year US TIPS ETF

LTPZ tracks a market-value-weighted index of long-term US Treasury Inflation Protected Securities.

The PIMCO 15+ Year U.S. TIPS Index is highly sensitive to changes in real interest rate expectations, and surging stocks have undermined rate cut bets, weighing on the ETF.

LTPZ: The Stock Market Bubble Raises The Stakes For TIPS

SPDR Portfolio TIPS ETF

Vanguard Short-Term Inflation-Protected Securities ETF

Investors looking to adjust their allocations may want to add Treasury Inflation-Protected Securities, or TIPS, to their fixed income portfolio. At least since the CPI notched a 9% year-over-year increase in the summer of 2022, inflation has been back on investors' minds.

Worried About Inflation? Consider TIPS ETFs

Both nominal and real rates are down across the curve. The catch is that the curve now embeds some very aggressive Fed easing assumptions. Buying long-duration TIPS doesn't offer a particularly attractive risk/reward here.

LTPZ: More Risk Than Reward Further Out On The TIPS Curve

The PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund offers a great opportunity to profit from a potential decrease in US real (inflation-adjusted) borrowing costs. The LTPZ offer a 2% real yield in addition to payments tied to CPI, and will rise in price if long-term interest rate expectations fall relative to inflation expectations. The LTPZ has significant upside potential if real bond yields decline, which is likely due to the US government's rising debt servicing costs.

LTPZ: TIPS Have The Best Risk-Reward Outlook I Have Ever Seen

Schwab US TIPS ETF

PIMCO 1-5 Year US TIPS ETF

I'm not even retired and I've been buying long-term inflation-protected U.S. Treasury bonds in my 401(k) with both hands.

These bonds, perfect for retirees, are paying twice their historic average

US inflation rates reached 40-year highs in June 2022, prompting investors to move into Treasury Inflation Protected Securities (TIPS) funds. The article reviews two such ETFs: PIMCO 1-5 Year U.S. TIPS Index ETF and PIMCO 15+ Year U.S. TIPS Index ETF.  TIPS are also compared against other inflation hedges. With High-Yield Corporates outperforming TIPS since 2001 and stocks providing higher returns long-term, I give both STPZ and LTPZ Sell ratings.

Short Or Long, TIPS ETFs Are A Bust

The PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund offers investors exposure to long-term inflation-linked bonds that stand to benefit from any decline in real interest rate expectations. Real GDP growth should average little more than zero over the coming years even if the unemployment rate remains historically low.

LTPZ: Real Yields May Need To Move Back Below Zero To Prevent A Fiscal Meltdown

The PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (LTPZ) offers investors exposure to long-term inflation-linked bond yields, with average maturity of 22 years. The real yield is now 1.7% and monetary policy conditions are turning increasingly favorable.

LTPZ: Long-Dated Linkers Look Good For 2023

LTPZ invests in long-term treasury inflation-protected securities. Skyrocketing inflation has led to significant dividend growth for the fund, with LTPZ currently yielding 9.0%.

LTPZ: Long-Term TIPS Fund, Fully-Covered 9.0% Dividend Yield

In 2022, LTPZ recorded a significant hike in its annual average yield, primarily due to higher interest income as well as huge decline in its market price. In the absence of another major inflation, the utility of holding this TIPS fund will decrease dramatically.

LTPZ: Rising Yield, Increasing Risk

LTPZ invests in long-term treasury inflation-protected securities. Although the fund is a good inflation hedge, and has performed comparatively well for years, it has an Achilles' heel.

LTPZ: Good Inflation Hedge, But Excessively Risky, Not A Buy

My "cocktail of deflationary events" thesis has been playing out, pushing the PIMCO 15+ Year U.S. TIPS fund to its worst drawdown since March 2020. A more hawkish Fed and the winding down of fiscal stimulus have probably marked the peak in inflation expectations and in LTPZ price.

LTPZ: Selloff Is Probably Not Over Yet

SPDR Bloomberg 1-3 Month T-Bill ETF

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First Trust Long Duration Opportunities ETF

Invesco PureBeta 0-5 Yr US TIPS ETF

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At the November FOMC meeting, the Fed officially announced that it would begin tapering its bond purchase program, starting in mid-November. When the Fed began tapering its QE3 program over the course of 2014, the coupon supply from the U.S. Treasury was stable, leading to an increase in net supply takedown from the private market.

Tapering Impact On Treasury Supply

After calling for an imminent drop in the 10-year yield from 1.68%, I now present another trade that I believe to be overcrowded.

LTPZ: Inflation Is An Overcrowded Trade

Many investors are concerned about inflation, and with good reason.

LTPZ: Moderate Downside Protection And Inflation Hedge, Strong 6.5% Dividend Yield

AGFiQ U.S. Market Neutral Anti-Beta Fund

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We have highlighted few ETFs that could prove compelling choices amid the backdrop of economic recovery and concerns over the upcoming tax hike and surging yields.

Worried About Tax Hike and Surging Yields? 5 ETFs to Bet On

With inflation becoming a concern among many investors, a look at TIPS may be warranted.

LTPZ: Getting Hit By Rising Yields, Lack Of Official Inflation

Most investors would likely be surprised to learn that long-term TIPS have been the best performing of the major asset classes in 2020. In this article, I explore why the PIMCO 15+ Year U.S. TIPS fund has done well, and why it may be a valuable addition to a portfolio.

PIMCO 15+ Year U.S. TIPS Fund: An Under-The-Radar Winner

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The best TIPS ETFs for Q1 2021 are LTPZ, IVOL, and SPIP.

Best TIPS ETFs for Q1 2021

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Index funds are a great way for investors gain diversity among their holdings and spread out the risk of single-stock ownership. The post 7 Cheap Index Funds for the Careful Investor appeared first on InvestorPlace.

7 Cheap Index Funds for the Careful Investor

The best TIPS ETFs for Q4 2020 are LTPZ, IVOL, and TIP.

Best TIPS ETFs for Q4 2020

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The Treasury will reopen CUSIP 912810SM1 in a Thursday auction, creating a 29-year, 6-month TIPS.

30-Year TIPS: Poster Child For A 'Volatile' Safe Investment

I believe now is a good time for investors to keep an open mind and look around for opportunities that have been flying under the radar.

News for PIMCO 15+ Year US TIPS ETF ETF (LTPZ)