SCHP Profile
The Schwab U.S. TIPS ETF is strategically designed to provide investors with exposure to U.S. Treasury Inflation-Protected Securities (TIPS), which are government bonds specifically issued to safeguard against inflation. The fund aims to invest a minimum of 90% of its net assets in securities that are constituents of its benchmark index. This index comprises a comprehensive selection of publicly-issued TIPS that meet specific criteria, including having at least one year remaining to maturity and being rated investment grade.
The underlying index exclusively includes TIPS that are denominated in U.S. dollars and are characterized by fixed rates with no convertibility features. To ensure liquidity and relevance, the TIPS included must have an outstanding face value of $500 million or more. This selection criterion provides a broad and diverse representation of inflation-protected securities, capturing a significant portion of the U.S. TIPS market while avoiding those with shorter maturities or lower ratings.
The fund's investment approach involves tracking the performance of this index, which serves as a benchmark for U.S. Treasury Inflation-Protected Securities. By closely aligning its holdings with the index, the Schwab U.S. TIPS ETF aims to deliver returns that reflect the performance of these inflation-protected bonds. The focus on investment-grade securities ensures a higher level of credit quality and stability for investors seeking to hedge against inflation while maintaining exposure to the U.S. Treasury securities market.
Investors in the Schwab U.S. TIPS ETF benefit from the inherent protection against inflation provided by TIPS, which adjust their principal value in accordance with changes in the Consumer Price Index (CPI). This inflation-adjusted feature makes the ETF an attractive option for those looking to preserve purchasing power and achieve a more stable real return. The fund offers a practical solution for diversifying fixed-income investments with an emphasis on inflation protection and government-backed securities.
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