Want to Protect Your Portfolio From Inflation? Here Are 4 TIPS Funds That Can Help

The US Bureau of Labor Statistics will release April inflation data this week. The numbers will be closely watched by investors who’ve grown concerned about inflation, as the Iran war has pushed up energy and commodity prices.

Inflation worriers may be thinking about adding inflation protection to their portfolios. But do they need to?

“When you’re working, you typically are earning some sort of cost-of-living adjustment in your paycheck. You probably don’t need to go out of your way to include inflation-protected bonds in your portfolio,” explained Morningstar director of personal finance and retirement planning Christine Benz on a recent episode of The Morning Filter podcast. “You’re not spending from it yet, and stocks will be your best defense against inflation.”

For retirees, though, inflation protection is a must.

“When you’re in retirement, it’s a different ball game because you’re extracting at least some of your cash flows from your portfolio, and some of those safer investments—which are important to own, like cash and bonds—will be vulnerable to inflation," says Benz. “That’s where dedicating a component of the portfolio to inflation-protected bonds can be really valuable because those bonds give you an inflation adjustment to help keep your purchasing power whole.”

For investors who’d like to add some inflation protection to their portfolios, exchange-traded funds and mutual funds investing in Treasury Inflation-Protected Securities are one tool to consider.

What Are Inflation-Protected Bond Funds?

TIPS funds and ETFs invest primarily in debt securities that adjust their principal values in line with the rate of inflation. These inflation-protected bonds can be issued by any organization, but the US Treasury is currently the largest issuer of these types of securities.

4 of the Best TIPS Funds and ETFs to Buy in 2026

These top inflation-protected bond funds and ETFs earn Gold or Silver

, have 100% analyst coverage, and are available to retail investors. All data is as of May 5.

1. Schwab US TIPS ETF SCHP
2. State Street SPDR Portfolio TIPS ETF SPIP
3. Vanguard Inflation-Protected Securities Fund VIPSX
4. iShares TIPS Bond ETF TIP

Here’s a quick look at each of these top inflation-protected bond funds and ETFs. Be sure to review a fund’s complete report for more details.

Schwab US TIPS ETF

• Index Fund: Yes
• Morningstar Category
  : US Fund Inflation-Protected Bond
• Morningstar Medalist Rating
  : Gold
• Prospectus Net Expense Ratio
  : 0.03%

Schwab US TIPS ETF provides investors with exposure to the full spectrum of Treasury Inflation-Protected Securities for a low fee.

The fund tracks the Bloomberg US Treasury Inflation-Linked Bond Index (Series-L), which includes US TIPS with at least one year until maturity. The index weights holdings by their market value and excludes amounts held by the Federal Reserve to reflect the amount available to the public. TIPS carry low credit risk as they’re backed by the creditworthiness of the US government, being issued by the US Treasury. Market-value weighting is a sensible and efficient approach here, as low credit risk and ease of trading leave little room for mispricing in the TIPS market.

TIPS offer a hedge against unexpected inflation as their principal amounts are linked to the Consumer Price Index, which tracks the prices paid by US consumers. The principal rises when the CPI rises, resulting in higher coupon payments. TIPS yield less than Treasuries with a similar maturity by the amount of inflation that the market expects over its duration. As a result, they will likely outperform Treasuries with a similar maturity when actual inflation exceeds the expected inflation that’s implied by their prices. However, Treasuries will likely offer higher real returns when inflation is lower than expected.

Interest rate risk is the other driver of returns for this fund, given its lack of credit risk. Spanning the entire maturity spectrum past one year gives this fund an average effective duration of 6.5 years as of October 2025. This is in line with most peers in the inflation-protected bond Morningstar Category. Some peers have pronounced short- or long-term tilts that can skew the category average’s performance during volatile markets. Nonetheless, the fund’s duration-driven excess returns should be minimal over the long run.

Active funds in this category can take stakes in corporate or securitized bonds that carry higher credit risk. The fund’s TIPS-only portfolio has and should continue to hold up better in credit shocks, such as during March 2020.

The fund’s low 0.03% annual fee lands among the cheapest in its category and should help it maintain its performance edge over pricier rivals.

Read Morningstar’s full report on the Schwab US TIPS ETF.

State Street SPDR Portfolio TIPS ETF

• Index Fund: Yes
• Morningstar Category
  : US Fund Inflation-Protected Bond
• Morningstar Medalist Rating
  : Silver
• Prospectus Net Expense Ratio
  : 0.12%

SPDR Portfolio TIPS ETF provides investors with exposure to the full spectrum of Treasury Inflation-Protected Securities for a reasonably low fee. Despite its cost advantage, there are cheaper alternatives.

The fund tracks the Bloomberg US Government Inflation-Linked Bond Index, which includes US TIPS with at least one year until maturity. The index weights holdings by their market value, which mitigates turnover and transaction costs. TIPS carry low credit risk as they’re backed by the creditworthiness of the US government, being issued by the US Treasury. Market-value weighting is a sensible and efficient approach here, as low credit risk and ease of trading leave little room for mispricing in the TIPS market.

TIPS offer a hedge against unexpected inflation as their principal amounts are linked to the Consumer Price Index, which tracks the prices paid by US consumers. The principal rises when the CPI rises, resulting in higher coupon payments. TIPS yield less than Treasuries with a similar maturity by the amount of inflation that the market expects over its duration. As a result, they will likely outperform Treasuries with a similar maturity when actual inflation exceeds the expected inflation that’s implied by their prices. However, Treasuries will likely offer higher real returns when inflation is lower than expected.

Interest rate risk is the other driver of returns for this fund given its lack of credit risk. Spanning the entire maturity spectrum past one year gives this fund an average effective duration of 6.9 years, as of October 2025. This is in line with most peers in the inflation-protected bond Morningstar Category. Some peers have pronounced short- or long-term tilts that can skew the category average’s performance during volatile markets. Nonetheless, the fund’s duration-driven excess returns should be minimal over the long run.

Active funds in this category can take stakes in corporate or securitized bonds that carry higher credit risk. The fund’s TIPS-only portfolio has and should continue to hold up better in credit shocks, such as during March 2020.

The fund’s 0.12% annual fee lands among the cheapest quintile of its category. Though this is not the cheapest option out there, the fund’s low fee should help it maintain its performance edge over pricier rivals.

Read Morningstar’s full report on the State Street SPDR Portfolio TIPS ETF.

Vanguard Inflation-Protected Securities Fund

• Index Fund: No
• Morningstar Category
  : US Fund Inflation-Protected Bond
• Morningstar Medalist Rating
  : Silver
• Prospectus Net Expense Ratio
  : 0.20%

Vanguard Inflation-Protected Securities delivers on this real return strategy through its straightforward, effective approach that focuses almost exclusively on Treasury debt.

At the end of 2021, Vanguard appointed John Madziyire to lead this effort after the fund’s longtime manager retired. Madziyire brings two decades of industry experience and joined Vanguard in 2017, where he previously headed the firm’s European rates desk in London. He now leads Vanguard’s US Treasuries and Treasury Inflation-Protected Securities operations and has successfully managed global rates strategies for more than a decade. While his tenure at the helm here is limited, the fund benefits from the firm’s ample active bond platform resources, including its senior investment committee, dedicated Treasury traders, and quantitative analysts.

The portfolio maintains a focused “pure play” approach by concentrating on US TIPS (typically more than 90% of assets) while avoiding other security types that often appear in competitors’ portfolios. The team draws on macro insights from Vanguard’s senior investment committee to establish risk guidelines that track closely with the Bloomberg US Treasury Inflation-Protected Index. Madziyire makes active bets through modest duration and yield-curve adjustments and employs trading strategies to capitalize on temporary market imbalances between TIPS, nominal Treasuries, and Consumer Price Index swaps. The recent addition of CPI swaps expands the toolkit and gives him greater flexibility to express his market views. Understanding TIPS liquidity challenges well, Madziyire typically maintains small positions in cash and nominal Treasuries.

The fund’s effectiveness lies in its simplicity. While Madziyire and his team technically can invest up to 20% in non-inflation-linked bonds, tight internal guidelines and a small tracking error budget limit this flexibility; that stands in contrast to many peers who enjoy broader latitude. As of September 2025, the fund’s 6.5-year duration matched the index, and yield-curve positioning was neutral to the index; this changed from earlier in 2025 when they anticipated a steepening of the curve. The portfolio had a few percentage points in nominal Treasuries for liquidity.

The fund’s disciplined process has produced solid long-term performance near the median for the inflation-protected bond Morningstar Category. Madziyire’s results since he joined are consistent with the fund’s long-term record. Over the trailing 10 years, the I share class’ 2.9% annualized through September 2025 was about the same as its typical peer and slightly less than the benchmark. While results are not particularly compelling, Vanguard has managed to keep up while taking less risk than its peers. The fund has delivered consistent performance across calendar years, and its razor-thin expenses position it well for continued competitive returns.

Read Morningstar’s full report on the Vanguard Inflation-Protected Securities Fund.

iShares TIPS Bond ETF

• Index Fund: Yes
• Morningstar Category
  : US Fund Inflation-Protected Bond
• Morningstar Medalist Rating
  : Silver
• Prospectus Net Expense Ratio
  : 0.18%

IShares TIPS Bond ETF offers a well-constructed portfolio covering the full spectrum of US Treasury Inflation-Protected Securities at a reasonably low fee.

The fund tracks the ICE US Inflation Linked Treasury Index, which selects TIPS with at least one year until maturity. The index weights holdings by their market value and excludes amounts held by the Federal Reserve to reflect the amount available to the public. TIPS carry low credit risk as they’re backed by the creditworthiness of the US government, being issued by the US Treasury. Market-value weighting is a sensible and efficient approach here as low credit risk and ease of trading leave little room for mispricing in the TIPS market.

TIPS offer a hedge against unexpected inflation as their principal amounts are linked to the Consumer Price Index, which tracks the prices paid by US consumers. The principal rises when CPI rises, resulting in higher coupon payments. TIPS yield less than Treasuries with a similar maturity by the amount of inflation that the market expects over its duration. As a result, they will likely outperform Treasuries with a similar maturity when actual inflation exceeds the expected inflation that’s implied by their prices. However, Treasuries will likely offer higher real returns when inflation is lower than expected.

Interest rate risk is the other driver of returns for this fund, given its lack of credit risk. Spanning the entire maturity spectrum past 1 year gives this fund an average effective duration of 6.5 years, as of October 2025. This is in line with most peers in the inflation-protected bond Morningstar Category. Some peers have pronounced short- or long-term tilts that can skew the category average’s performance during volatile markets. Nonetheless, the fund’s duration-driven excess returns should be minimal over the long run.

Active funds in this category can take stakes in corporate or securitized bonds that carry higher credit risk. The fund’s TIPS-only portfolio has and should continue to hold up better in credit shocks, such as during March 2020.

The fund’s 0.18% annual fee lands among the cheapest quintile of its category. Though not the cheapest option out there, this low fee should help it maintain its performance edge over pricier category peers.

Read Morningstar’s full report on the iShares TIPS Bond ETF.

How to Screen for More of the Best TIPS Funds and ETFs to Buy

Given their high Morningstar Medalist Ratings, we expect the four top-rated funds featured here to outperform their peers over a full market cycle. Investors can use the Morningstar Investor Screener to create a larger list of TIPS ETFs and funds to investigate further. Here’s how to get started and possible filters to use.

Access the prebuilt screen. Visit Morningstar.com’s Inflation-Protected Bond Funds list. Click on the blue button, “Screen with Investor >”. The full list of all inflation-protected bond funds and ETFs will populate in the screener. From there, you can filter on other metrics that matter to you.

Medalist Rating (Overall): You can choose to filter the list by Medalist Rating, focusing on funds and ETFs with our highest Medalist Ratings of Gold, Silver, and Bronze.

Adjusted Expense Ratio: Click on the blue “+ Filter” button and in the pop-up box, select “People and Price.” From there, click “Adjusted Expense Ratio.” Then you can use the sliding tool to filter out funds and ETFs trading above a particular expense ratio level.

Using the “+ Filter” button, you can continue to further filter your list by Branding Name (think of that as an asset manager), index or active fund, and other factors.