Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. Concerns about sticking

inflation are sending many investors looking for a direct hedge against it.

Treasury inflation protected securities or tips are designed to do that.

You can buy tips, bonds directly or invest in funds that do it for you.

Exchange traded funds provide an easier way to invest in tips. However, there are still risk investors should consider before

tweaking their portfolios. Dan Seteeroff is a senior manager research analyst for Morningstar

research services. I spoke with Morningstar's new ETF investor editor about what you should know

before investing in tips ETFs. Thanks for being here, Dan, and congratulations on your

new role as editor of Morningstar's ETF Investor newsletter. Thank you, Ivana. It's great to be back

and to see you again. Well, let's get down to business. Before we get into what tips ETFs are,

let's first start with what are tips and how do they work.

Yeah, so tips is just an acronym. It stands for Treasury, Inflation, protected security, right?

And that kind of describes what a Tips is, right? In most ways, it's going to be pretty much

identical to a regular treasury bond, except for one key difference, and that's the inflation

protected component of it.

So basically what that means is that the interest payments that you receive and the face value

of the bond are going to adjust for inflation.

So as the CPI number ticks up higher and higher every year, the face value of the bond

and the interest payments that you receive are going to commensurately tick up higher and higher

over time.

So that's basically the idea is that you're just getting some inflation protection on those components of the bond

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