With inflation persistent and rising due to soaring energy prices, it’s not surprising that advisors and fixed income investors are revisiting Treasury Inflation-Protected Securities (TIPS). In fact, data indicate that inflation-linked bonds have been among the most popular fixed income destinations, dating back to 2022.
However, not all TIPS ETFs — and there are plenty — come from the same cloth. WisdomTree Inflation Plus Fund (WTIP ) breaks from the pack by featuring a portfolio comprised of not only TIPS, but commodities — an asset class known for fighting inflation — as well.
The difference is material. WTIP is higher by 19.07% year-to-date, confirming the validity of the commodities/TIPS approach. Conversely, the largest traditional TIPS ETF is up just 1.26% since the start of 2026. WTIP’s advantages over basic TIPS and the related funds could prove notable at a time when the TIPS investor base is broadening.
“Historically, pension funds and insurers have been the main investors because of their long-term liabilities linked to inflation. But even since Covid, I would say 2020, 2021, the investor base has broadened dramatically and we see asset managers [and] central banks coming to the asset class, [such as] sovereign wealth funds,” according to BNP Paribas.
WTIP’s Run May Not Be Over
Clearly, WTIP is delivering returns previously unheard of it when it comes to TIPS. There may be tailwinds in place, suggesting the ETF has more in store for investors. For example, some market observers believe that, on a breakeven basis, TIPS have attractive valuation.
“We have a geopolitical fragile environment," said BNP Paribas. They continued, “We have supply constraints. We have fiscal expansion in basically every DM market. and we also have energy transitions. So, from a valuation perspective, inflation protection still looks reasonably priced, and that is for the breakeven side.”
Additionally, commodities increasingly appeal to asset allocators. That’s because the asset class has arguably been a better inflation fighter than TIPS over the past several years. It’s also because commodities sport low correlations to stocks and bonds, meaning they serve the objective of diversifying portfolios.
Other factors may support WTIP’s fixed income sleeve in the near term, confirming the ETF’s utility relative to competing strategies.
“Growth is slowing and inflation remains uncertain. That combination creates a super supportive environment for inflation in bonds because you are paid for both income and inflation protection. So, even with the rally that we have had in recent weeks, it still makes sense in ,an allocation,” concluded BNP Paribas.
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