All three hold Treasury Inflation-Protected Securities, but VTIP holds only short ones while SCHP and TIP hold all maturities. Here is how that played out in the 2021–2023 inflation, what each yields, the fee gap, and why a TIPS fund is not the same as a TIPS held to maturity.
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The deciding question is when you might need the money. TIPS are Treasury bonds whose principal rises and falls with the Consumer Price Index. A TIPS fund’s return is roughly the inflation adjustment plus its real yield, minus or plus price changes when real yields move, and that last part scales with duration. VTIP keeps duration short, so its price barely moves; SCHP and TIP hold maturities out to 30 years, so they swing more in both directions.
Scope: US investors using a TIPS ETF in a retirement portfolio. Not covered: I bonds, nominal bond funds (see BND vs AGG) and active inflation funds. Education, not advice for your situation.
| Situation | Tends to fit | Why |
|---|---|---|
| Within 5 years of retirement, protecting near-term spending | VTIP | Short maturities; small price swings |
| Long horizon, want inflation-linked bonds in the mix | SCHP | All maturities at 0.03% |
| Already own TIP in a taxable account with gains | Often keep it | Selling may cost more than the fee gap |
| Need a known inflation-adjusted amount on a known date | Individual TIPS ladder | Only bonds held to maturity have a floor |
Issuer figures as of Sep 30, 2026 unless noted; trailing returns are NAV returns. Distribution yields and drawdowns from Exent market data (daily total return with distributions reinvested, to Sep 30, 2026).
| VTIP (Vanguard) | SCHP (Schwab) | TIP (iShares) | |
|---|---|---|---|
| Index | Bloomberg U.S. Treasury Inflation-Protected Securities (TIPS) 0–5 Year Index | Bloomberg US Treasury Inflation-Linked Bond Index (Series-L) | ICE U.S. Treasury Inflation Linked Bond Index |
| Maturities held | Under 5 years | 1 year and longer | 1 year and longer |
| Bonds held | 25 | 49 (Oct 22, 2026) | 48 (Oct 23, 2026) |
| Expense ratio | 0.03% | 0.03% | 0.18% |
| Assets | $20.9B ETF / $73.1B whole fund | $16.5B (Jun 30, 2026) | $14.2B |
| Inception | Oct 12, 2012 | Aug 5, 2010 | Dec 4, 2003 |
| Duration | 2.3 years | Not published in our issuer data | 6.21 years (effective, Oct 22, 2026) |
| 30-day SEC yield (Oct 22, 2026) | 2.33% (excludes inflation adjustment) | 5.43% | 5.42% (includes inflation adjustment) |
| Real yield (Oct 22, 2026) | — | — | 2.65% |
| Distribution yield, trailing 12 months (Sep 30, 2026) | 4.19% | 5.10% | 4.71% |
| 1-year return (NAV) | 1.33% | −2.01% | −2.14% |
| 3-year return, per year (NAV) | 4.77% | 3.73% | 3.59% |
| 5-year return, per year (NAV) | 2.89% | −0.03% | −0.17% |
| 10-year return, per year (NAV) | 2.94% | 2.10% | 1.98% |
| Largest drop, 5 years to Sep 30, 2026 (daily) | −5.5% | −14.3% | −14.5% |
SCHP and TIP hold nearly the same set of TIPS (all maturities of one year or more), and their calendar-year returns from 2021 to 2025 were within 0.3 points of each other every year (Exent market data); over the 10 years to Sep 30, 2026, SCHP returned 2.10% a year and TIP 1.98% at NAV, a gap close to the 0.15-point fee difference. The fee is the main lasting difference.
Only the short one came close. Consumer prices rose 7.0% in 2021, 6.5% in 2022 and 3.4% in 2023, December to December (BLS 2021, 2022, 2023). Calendar-year total returns from Exent market data:
| Year | CPI (Dec to Dec) | VTIP | SCHP | TIP |
|---|---|---|---|---|
| 2021 | 7.0% | 5.4% | 5.9% | 5.7% |
| 2022 | 6.5% | −3.0% | −12.0% | −12.2% |
| 2023 | 3.4% | 4.6% | 3.9% | 3.8% |
| 2021–2023 compounded (Exent calculation) | 17.8% | 7.0% | −3.2% | −3.7% |
In 2022, with inflation running above 6%, the long TIPS funds still lost about 12%. The inflation adjustment was there; the loss came from real yields rising, which cuts the price of every TIPS and hits long maturities hardest. VTIP’s 2.3-year duration kept its 2022 loss to −3.0%. None of the three kept up with prices over the full three years, which is the honest limit of a TIPS fund: it protects against inflation over the life of its bonds, not against a jump in real interest rates along the way.
Because the guarantees attach to the bond, not the fund. According to TreasuryDirect, TIPS are issued with 5-, 10- or 30-year terms, pay interest every six months, and at maturity pay “either the increased (inflation-adjusted) price or the original principal, whichever is greater.” If you hold a TIPS to maturity, you know the real value you will get back. A fund keeps selling bonds as they approach maturity and buying new ones, so it never reaches that date, and its price on any given day depends on real yields that day.
Taxes differ by account too. TreasuryDirect notes that federal tax is due each year on the interest, that increases in principal may affect your federal taxes, and that there is no state or local tax on TIPS you own directly; with a fund, most states let you exclude the share that came from Treasuries (check the fund’s year-end tax notice). A fund distributes that income to you each year, so in a taxable account you can owe tax on inflation adjustments you did not spend. Many investors hold TIPS funds in an IRA or 401(k) for that reason.
For spending you can date, often yes. A ladder of individual TIPS maturing one per year turns each year’s spending into a known inflation-adjusted amount. Morningstar’s 2025 retirement income research found that a 30-year TIPS ladder supported an inflation-adjusted withdrawal rate of about 4.5% as of Sep 30, 2025 (Morningstar), and 4.8% with January 2026 yields (Morningstar), though it spends down the principal by design. A fund is simpler, spreads small amounts across many bonds and needs no rebuilding. The full trade-off is in bond ladder vs bond fund; the concept in inflation-protected securities; and TIPS next to gold, real estate and short bonds in inflation protection ETFs for retirement.
Exent calculation, illustrative: a 61-year-old sets aside $120,000 for inflation-protected spending in the first five years of retirement and compares a sudden 1-point rise in real yields across the three funds. Inputs: VTIP’s and TIP’s durations from the table, TIP’s 6.21 years assumed for SCHP (it holds nearly the same TIPS and publishes no duration in our issuer data), and each fund’s expense ratio; the duration rule of thumb ignores convexity and the inflation accrual earned meanwhile.
| VTIP | SCHP | TIP | |
|---|---|---|---|
| Duration | 2.3 yrs | 6.21 yrs (assumed, = TIP) | 6.21 yrs |
| Price change on $120,000 from a 1-point real-yield rise (duration % × $120,000) | ≈ −$2,760 | ≈ −$7,452 | ≈ −$7,452 |
| Yearly fund expenses on $120,000 | $36 | $36 | $216 |
| Extra cost of TIP over 10 years, before growth (($216 − $36) × 10) | — | — | $1,800 |
For money that will be spent within five years, VTIP’s average maturity of 2.4 years (Vanguard) lines up with the spending date and its price risk is a little over a third of the others’ (2.3 ÷ 6.21 ≈ 0.37). For money that will stay invested for decades, the longer funds hold bonds paying today’s real yield for longer, and a later fall in real yields would lift them more. Between SCHP and TIP, the arithmetic is only the fee.
| Fund | Pros | Cons |
|---|---|---|
| VTIP | Short duration (2.3 years); smallest 5-year drop (−5.5%); 0.03% fee; tracks near-term inflation spending well. | Little gain if real yields fall; payouts swing with recent inflation; holds only 25 bonds, all maturing within five years. |
| SCHP | All TIPS with at least one year left, at 0.03%; same exposure as TIP for a sixth of the fee. | Long-duration price swings (−12.0% in 2022); no published duration in our issuer data; inflation adjustments taxable yearly in a taxable account. |
| TIP | Longest record (2003); publishes real yield and effective duration; very liquid. | 0.18% fee, six times SCHP’s; same 2022-style rate risk (−12.2%); same tax drag in a taxable account. |
| Option | What it is | Cost | When it fits |
|---|---|---|---|
| STIP (iShares) | 0–5 year TIPS, like VTIP | 0.03% | Same role as VTIP; 2022 return −3.0% |
| Individual TIPS ladder | TIPS bought at auction or on the market, held to maturity | No fund fee | Known real amounts on known dates |
| VGSH (Vanguard) | 1–3 year nominal Treasuries | 0.03% | Short safe money without an inflation link; 2022 return −3.8% |
| BND or AGG | Core investment-grade bonds | 0.03% | Long-term bond share; no inflation protection |
When you need certainty on a date, or when the fund sits in the wrong account. Counterexample: a retiree who bought a long TIPS fund at the start of 2022 to cover the next year’s spending saw it fall about 12% while prices rose 6.5%, the opposite of what the purchase was meant to do. An individual TIPS maturing that year, or VTIP, would have matched the job far better. Long TIPS funds suit long-term money; they are not a cash substitute. See investing near retirement and the bucket strategy.
TIPS funds protect against inflation only over the life of their bonds, so it helps to know what is driving real yields. Over the 15 years to June 30, 2026, 90.49% of actively managed US large-cap funds underperformed the S&P 500 (S&P DJI, SPIVA); Market intel adds context for the index plan you chose, and does not pick your ETFs, tell you when to trade or guarantee better results.
VTIP for money you may spend within about five years: its 2.3-year duration limited its 2022 loss to 3.0% (Exent market data). SCHP for long-term TIPS exposure: all maturities, duration similar to TIP’s 6.21 years, more swing, the same 0.03% fee.
Real yields rose sharply, which lowers TIPS prices, and long maturities fall most. SCHP lost 12.0% and TIP 12.2% in 2022 (Exent market data) even though CPI rose 6.5%.
Its exposure is nearly the same as SCHP’s, whose calendar-year returns from 2021 to 2025 were within 0.3 points of TIP’s. TIP charges 0.18% against 0.03%, or $150 more a year per $100,000.
Short TIPS funds can protect near-term spending from inflation with small price swings. Long TIPS funds can fall when real yields rise, so retirees often match the fund’s duration to when they will spend the money.
Inflation adjustments are taxable each year at the federal level, even before you spend them, so many investors prefer an IRA or 401(k). Interest from TIPS you own directly is free of state and local tax; with a fund, most states let you exclude the share that came from Treasuries (check the fund’s year-end tax notice).
No. An individual TIPS held to maturity pays the greater of its inflation-adjusted or original principal. A fund never matures, so its value depends on real yields on the day you sell.
On Oct 22, 2026, TIP’s real yield was 2.65% and its SEC yield 5.42% including inflation; SCHP’s SEC yield was 5.43%. VTIP’s SEC yield was 2.33% excluding inflation adjustments. Yields change daily.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.