A sound investment process and strong management team underpin iShares 0-5 Year TIPS Bond ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in BBB rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. 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

iShares 0-5 Year TIPS Bond ETF earns a High Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. The predominant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Noteworthy risk-adjusted performance also supports the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. 

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

The investment seeks to track the investment results of the ICE U.S. Treasury 0-5 Year Inflation Linked Bond Index.  The index measures the performance of the inflation-protected public obligations of the U.S. Treasury, commonly known as "TIPS, " that have a remaining maturity of less than or equal to five years. The fund will invest at least 80% of its assets in the component securities of the underlying index, and and the fund will invest at least 90% of its assets in U.S. Treasury securities that BFA believes will help the fund track the underlying index.  

 This strategy's 12-month yield is 2.8%, lower than its average peers' 4.7%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 0.7%. While a lower yield may deliver less income, it also tends to indicate lower credit risk. The portfolio has a higher average surveyed credit quality of AA, compared with the typical peers' A, and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies with less credit risk may help to provide a reliable ballast during periods of market stress. In terms of interest-rate risk, compared with others in the Inflation-Protected Bond category, this fund maintains a significantly lower average effective duration of 2.5 years compared to the category's 6.1 years. The shorter a strategy's duration, the less sensitive it is to shifts in interest rates. This fund, with a 2.5-year duration, is expected to gain 2.5% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

High

Process

iShares’s fixed income team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: James Mauro, Karen Uyehara. Experience on the team is abundant, with 13 years of average portfolio management experience. Together, they manage a total of 114 strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position 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

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares 0-5 Year TIPS Bond ETF

STIP tracks a market-value-weighted index of US Treasury Inflation-Protected Securities (TIPS) with a remaining maturity of less than 5 years.

STIP offers exposure to U.S. short-term TIPS, which currently delivers attractive yields. The fund could provide reasonable gains amid inflation and interest rate uncertainty. I see investors in the fund looking at up to a 5% return in the next 12 months.

STIP: Reasonable Gains Amid Inflation Uncertainty

iShares 0-5 Year TIPS Bond ETF is a TIPS portfolio that allows speculators to speculate on medium-term macroeconomic conditions. The Fund's performance is influenced by changes in short-term real yield expectations, rate policy, and inflation dynamics. The maturity walls and the need to reduce rates to save the economy may impact STIP's performance, and with sticky inflation, we think things could get good for STIP.

STIP: Lined Up For A Bet On Maturity Walls

iShares 0-5 Year TIPS Bond ETF is a cost-effective investment option that provides protection against inflation. The STIP ETF primarily invests in short-term Treasury Inflation-Protected Securities, or TIPS, with low credit risk. STIP stands out compared to other similar ETFs due to its focus on short-term TIPS and lower expense ratio.

STIP: The Play For Resurgent Inflation

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CPI figures are high, meaning the desperate need for real yields to grow continues. STIP provides a hedged exposure to inflation risk as coupons scale with inflation. However, the downside is to growth in real yields, where the nominal rate-inflation gap grows. The Fed will continue to raise rates to lower inflation, or at the very least allow real yields to rise by keeping nominal rates high, to tackle inflation.

STIP: Real Yields Can Only Grow

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Investors were net sellers of fund assets (including those of conventional funds and ETFs) for the first week in three, withdrawing a net $16.7 billion. Equity ETFs witnessed net outflows for the second week in three, handing back a little more than $7.8 billion for the most recent fund flows week. For the second week in three, taxable fixed income ETFs experienced net inflows, taking in $333 million this week.

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Based on the real yields from TIPS, they are already being priced for belligerent inflation, which should definitely concern equity investors. However, it also means that there probably isn't that much upside in the current real yields. In fact, Fed action is likely, and that isn't great for STIP. It's a pass, but also signals a reason to be cautious about equity markets.

STIP: Priced For Belligerent Inflation, But Not Fed Action

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The Fed's top economists reversed previous recession predictions. The stock market, measured by the S&P 500, is up nearly 20% since January.

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Apple

Airbnb

Akamai Technologies

AMC Entertainment

Anheuser-Busch InBev

Blackstone Group

Colgate-Palmolive

Credit Suisse

Duolingo

GameStop

Hain Celestial Group

Harmonic

Lucid Group

Mullen Automotive

Novavax

PacWest Bancorp

Palantir Technologies

Plug Power

PayPal

Rivian Automotive

Shoals Technologies Group

Skyworks Solutions

Tempur Sealy International

Trevena

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Consider STIP To Get Protection Against Recession.

Consider STIP To Get Protection Against Recession

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TIPS inflation factor can decline temporarily, even when inflation is high. We expect individual ultrashort TIPS to outperform ETFs for TIPS with maturities less than 5 years during the next several months.

Amazing Yields In Inflation-Protected Treasuries. Part 2

In today's macro environment, short-term instruments are preferable investments for non-stock allocations. TIPS deserve close attention as their YTM is positive today. Short-term TIPS should deliver better returns than regular Treasuries of similar maturities.

Amazing 9+% Yields In Inflation-Protected Treasuries

The real yield to maturity on the STIP is a respectable 1.06%. This yield is based on the current nominal yield minus average inflation expectations over the next 2.6 years. Short-term inflation expectations have fallen too fast recently and there is potential for them to rise if the Fed pares back its hiking cycle, which would benefit the STIP.

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Investing in TIPS ETFs, which offer shelter against rising inflation, would be prudent.

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Short-term Treasury Inflation-Protected Securities are a safe-haven investment in this turbulent market. They have no credit risk, no inflation risk, and very little interest rate risk.

News for iShares 0-5 Year TIPS Bond ETF ETF (STIP)