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Look Beyond Reported Yield Numbers Print E-mail
Written by TFB   
April 30, 2011

Jason Zweig wrote in his WSJ column about how different TIPS funds and ETFs report yield on TIPS funds and ETFs differently.

How Inflation-Protected Funds Get to Inflate Their Yields

The difference primarily comes from whether the inflation adjustment is included in the reported yield.

Because the legally required SEC yield only covers 30 days, if inflation adjustment is included in the calculation, it can skew the result when inflation numbers change from month to month.

The the most reliable and relevant yield number for a TIPS fund or ETF is its weighted average real yield to maturity. Unfortunately most companies, including Vanguard which operates the largest TIPS fund, don't report this number because it's not legally required (iShares does).

The yield of a TIPS fund or ETF is driven by the yields on the bonds it owns. You can get a feel of what the yield should be by looking at the yields on the bonds. See TIPS Data and Resources for where you can look up the real yields.


 
 

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