⚖️ TIP vs VTIP Comparison · Free & No Signup

TIP vs VTIP: Broad TIPS vs Short-Term TIPS — Duration Matters

Both TIP and VTIP protect against inflation using Treasury Inflation-Protected Securities. TIP has longer duration and higher interest rate sensitivity. VTIP is shorter and cheaper.

💰 VTIP is cheaper 🔬 Compare top 10 holdings → 💡 Plain-English verdict
🤝 BFF Take
VTIP Is Better for Most Investors — Cheaper, Less Rate Sensitive

TIP (iShares TIPS Bond ETF) and VTIP (Vanguard Short-Term Inflation-Protected Securities ETF) both invest in US Treasury Inflation-Protected Securities — bonds whose principal adjusts with the CPI. But they target very different maturity ranges. TIP holds TIPS across all maturities (effective duration ~7 years) at 0.19%, giving it higher interest rate sensitivity. VTIP specifically holds short-term TIPS with maturities under 5 years (effective duration ~2.5 years) at a much lower 0.04%. For most investors using TIPS as inflation protection, VTIP's shorter duration means less sensitivity to rate changes — making it a more predictable inflation hedge. TIP is appropriate if you want the full TIPS market at a higher fee and accept more rate risk.

📋 Quick Takeaways
📊TIP has ~7 year effective duration; VTIP has ~2.5 years — VTIP is far less sensitive to interest rate changes
💰VTIP costs 0.04% vs TIP's 0.19% — nearly 5x cheaper for shorter-duration inflation protection
🛡️Both protect against CPI inflation via principal adjustment — VTIP does it with less interest rate risk attached
📊 Data-Based Take: VTIP has the lower fee

Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.

Reviewed by a CFA® Charterholder · Data as of Jul 14, 2026 · Educational only, not financial advice
TIP
iShares TIPS Bond ETF
Expense Ratio
0.19%
1-Year Return
-1.2%
AUM
$14.7B
Holdings
50
VTIP
Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Expense Ratio
0.04% ✓
1-Year Return
-0.6%
AUM
$71.1B
Holdings
25

📋 TIP vs VTIP — Key Facts Side by Side

Metric TIP VTIP
Fund Name iShares TIPS Bond ETF Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
Issuer iShares Vanguard
Tracks Index Bloomberg US TIPS Bloomberg US Treasury Inflation-Protected Securities 0-5 Year
Expense Ratio 0.19% 0.04% ✓
Cost per $10K/yr $19.00 $4.00
AUM $14.7B $71.1B
Holdings 50 25
Inception 2003 2012
1-Year Return -1.16% -0.60%
3-Year Return +4.11% +5.27%
5-Year Return +0.67% +3.27%
Dividend Yield 3.77% 3.60%
Holdings Overlap See holdings overlap →
Avg Bid-Ask Spread 0.01% 0.01%

Expense ratio, AUM, and returns updated Jul 14, 2026 from ETF BFF database. Returns are annualised. Not investment advice.

📊 TIP vs VTIP — Annualised Returns

Annualised returns (trailing, price-based). Past performance does not guarantee future results.

🎯 Which Fund Fits Which Investor?

Often fits investors who...
TIP
  • want broader diversification (50 holdings vs 25)
  • want income and stability with lower portfolio volatility
Often fits investors who...
VTIP
  • want the lowest fees: saves ~$15/yr per $10K vs TIP
  • want income and stability with lower portfolio volatility

💰 What the Fee Difference Actually Costs

Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.

Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.

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❓ TIP vs VTIP — Frequently Asked Questions

Treasury Inflation-Protected Securities have their principal value adjusted quarterly based on changes in the Consumer Price Index (CPI). If inflation runs at 4%, the face value of your TIPS increases by 4%. The interest paid (a fixed coupon rate) is then calculated on the inflation-adjusted principal — so both your principal and your interest income grow with inflation. At maturity, you receive the greater of the original or inflation-adjusted principal.
Despite high inflation (which should benefit TIPS), TIP fell significantly in 2022. This seems counterintuitive but makes sense: the inflation protection aspect worked (principals increased), but the Federal Reserve raised interest rates aggressively to fight inflation. Rising rates reduce bond prices, and for longer-duration TIP, the rate increase outweighed the inflation adjustment benefit. VTIP, with much shorter duration, held up considerably better in 2022.
VTIP is generally preferred for most investors seeking inflation protection as a portfolio allocation. Its shorter duration means it behaves more like cash-plus-inflation-protection rather than a volatile interest rate instrument. TIP is appropriate for investors specifically wanting exposure to the full TIPS term structure and willing to accept the duration risk. For a straightforward "protect against inflation" allocation, VTIP is simpler and cheaper.
Common practice varies widely — some investors allocate 0-10% of their bond portfolio to TIPS, while others (particularly those near or in retirement concerned about inflation eroding fixed income) allocate 20-30% of bonds to TIPS. TIPS work best as a partial allocation within a diversified bond portfolio rather than as the only bond holding.
I-bonds (Treasury Series I Savings Bonds) often offer more favorable inflation adjustments and are completely immune to interest rate risk since they're not tradeable. However, I-bonds have a $10,000 annual purchase limit per person, can't be redeemed in the first year, and can't be held in IRAs. TIPS ETFs like TIP and VTIP can be purchased in unlimited amounts, held in any account type, and sold anytime. Both serve inflation protection — I-bonds are better for small amounts, TIPS ETFs for larger allocations.

New to ETF investing? See answers to the most common ETF questions →

📄 TIP & VTIP Fact Sheets

TIP Fact Sheet VTIP Fact Sheet
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.