An investor can buy or sell shares in an open-end TIPS mutual fund at any time without a brokerage account. A search on Morningstar returned 66 funds in the "Inflation-Protected Bond" category with no load, an initial investment of $10,000 or less, and an expense ratio of 1.0% or less. That's plenty to choose from.

Here are some of the most popular funds (by total assets), as well as some funds from the largest retail mutual fund families. When a fund has multiple share classes, the expense ratio is for the share class with the lowest initial investment requirement.

* Retrieved using Morningstar Fund Screener on July 25, 2009.

More dollars are invested in the Vanguard Inflation-Protected Securities Fund (VIPSX) than any other fund in this group. It's ten times the size of the Fidelity fund and almost 100 times the size of the T. Rowe Price fund. There's a very good reason: the Vanguard fund has the lowest expense ratio. 

Under the hood, these funds employ different strategies. The Vanguard fund basically invests in all the TIPS bonds in the market. As of this writing, there are only 30 TIPS outstanding from the U.S. Treasury. The Vanguard fund owns 25 (current holdings). Some funds are more passive with low turnover (T. Rowe Price, TIAA-CREF, American Century, Vanguard). Some are more active with high turnover (BlackRock, Hartford, PIMCO). Some have shorter duration (Vanguard, T. Rowe Price, American Century, Fidelity). Some have longer duration (BlackRock, PIMCO).

* Retrieved using Morningstar Fund Screener on July 25, 2009.

A fund's average duration affects risks and returns. The longer the duration, the more sensitive a fund is to interest rate changes. For TIPS funds, that's changes in real interest rates, not changes in nominal interest rates. All else being equal, if the yield curve steepens, a fund with a shorter duration will perform better. If the yield curve flattens, a fund with a longer duration will perform better.

How do investors know if the yield curve is about to steepen or flatten and which fund they should invest in? They don't know. The fund managers will exercise their best guesses and judgment when they position the fund's duration. That decision can change over time. To me, the Vanguard Inflation-Protected Securities Fund (VIPSX) looks like a reasonable choice with low expenses and low turnover -- nothing fancy, just a plain vanilla TIPS fund.