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WAPTX - Western Asset Inflation Prot fund. Is it too late?? Soon??

edited May 2012 in Fund Discussions
I have been debating whether to get into an Inflation Protected vehicle. I'm ignorant with regards to ETF's or Bonds themselves, so I thought the best way for me is a MF.

I came across several good funds and WATPX (Western Asset IP plus) seems to have a nice balance of risk and reward.

Any thoughts on this fund? Do you have any other options that I might consider??

FYI, I may have to put this in a taxable account with FIDO.

Also, Does anyone know of a good source to educate myself with regards to ETF's?

Thank you all who respond!!!


  • edited May 2012
    I'd say you're probably late with TIP (inflation protected bond) funds, although others may feel differently. In terms of inflation protection, a lot of natural resource-related equity funds have been creamed, but also represent a much greater level of volatility. In terms of income, MLPs still seem a bit overbought (although better than they were), but again, with MLPs you are looking at significant potential volatility - they are not for conservative investors, despite some recent articles acting like the contrary.

  • Here is a chart currently set for 1 year to compare a few tips funds and total stock market. You can change time period. It shows the TIP etf fund with highest return for 1 year. These returns have dividends reinvested.
    I would only use a tax deferred account not taxable for best tax efficientcy.
  • edited May 2012

    Just a few nickels and dimes from my viewpoint.
    You noted using FIDO and my first recommendation would be to use their FINPX, if you choose to invest in TIPs.
    You will find a side by side compare list in the link below. You may scroll down the list to compare various areas of each fund. Buying WATPX will cost you .4% extra in E.R. over FINPX, without any improvement in performance. Also note that the YTD in the compare list is from the end of the prior month. Click on any "blue highlighted" fund name to go further inside that fund data, where you will find the current YTD and more data. Don't scratch your head about the yield shown at the detail page, which you will find as a negative. This is because of demand for these issues and has driven the yield to this negative reading. Funds will post a true, positive yield gain to your fund held in your account.
    A few notes about active managed TIPs funds. Gov't TIPs come in flavors ranging from 1-20 year duration, and their own set of yields. Active managed funds may use any combo of these for their fund and also sometimes include other types of IG bonds, be they corp. or gov't, as well as some foreign bonds. Also, if you already have other bond funds and with some equity funds, too; TIPs may be part of those funds.
    TIPs remain part of a go-to area for safety, not unlike of gov't. bonds and continue to slowly move along in an upward path for the past several years.
    Today (Tuesday) finds TIPs down .2% and I suspect this is part of an attempted equity rally; however long it may last. Past this, TIPs have moved forward too, during the recent equity rally from last October.
    The majority of TIPs funds are plus or minus about .2% from one another; for a YTD, so I don't know that trying to chase or find a perfect TIPs fund is worth the effort. Pimco offers Real Return funds that are TIPs related; but at a stiff E.R. of 1.15% for some classes of these funds. The lowest E.R. is likely the best bet. The etf TIP, has an E.R. of .20% and about the same performance as active managed funds; so this may be a choice too; and could be purchased through FIDO if one has the brokerage option set up.
    Most active managed TIPs funds have a current yield range of 2.5-3.5%.
    While we have a fair percentage of TIPs in our bond funds, we also have direct exposure via FINPX and ACITX.
    I can not give you any info as to tax ramifications in a taxable acct.
    At least based upon the past 5 or so years, TIPs have moved slowly upward or near flat during big equity rally periods and have fared very well when there is a bad smell in the air. I would not discourage anyone from having some TIPs exposure during this current market period. Even if the equity markets proceeded to have a 30% rally from this point, I would not expect TIPs to be killed, they may just move sideways or be a bit to the downside. TIPs have watched the equity rabbit run past and forward and have also seen the equity rabbit run the other way backwards, while the TIPs turtle slowly moves forward.
    Although TIPs are regarded or written about as inflation protection investments (which they can be); they perform well during market turmoil and uncertainty; which we have in abundance at this point in time, in my opinion.
    This is not a buy and hold forever note; as all investments must be monitored, but our house has no concern with holding TIPs at this time.

    TIPS funds compare

    Take care,
  • Thank you all; great responses!

    Catch, I do have a FIDO brokerage account, so, much is available to me. Your compare included most of the MF's I identified as worthy. But I do have a quick question; you suggested FINPX would be a better choice, WHY?

    Thank you!!

  • edited May 2012
    Hi mcmarasco,

    Only noted FINPX as it is internal to FIDO and easy to move all or a portion of the fund if you chose within or to another FIDO fund; and not have to be concerned with a non-FIDO fund and a possible delay of of processing a transaction involving the settlement monies taking a few days.
    FINPX has as worthy a record as similar TIPs funds and a decent E.R. These are my only reasons. I noted we also have ACITX, but this is the only available TIPs fund in a non-FIDO acct.; but it too measures well against FINPX.
    I was still writing my previous reply and I now see ron and scott have added some info, too. I will stick with my opinion that TIPs will continue to perform well until the global uncertainty and/or growth issues are satisfied; and may continue to move forward after this period.
    While we have held TIPs funds for more than 1 year (held these in previous years, too) we added more direct exposure last week.
    Not that my opinion is worthy of consideration by anyone else, but I consider TIPs to be a fairly conservative area at this time, and I will surely note with our weekly Funds Boat post, of any changes to our holdings.
    As you have the brokerage feature, the TIP etf is of consideration, too.

    Current demand drives the yields lower to the negative and of course, the underlying price upward. Our primary goal is not for yield, but captial appreciation of the bond pricing.
    May 17 TIPS Auction results

    Take care,
  • Catch, your opinion is certainly worth listening too!!

    Thanks again!
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