New ETF Provider to Take on the TIPS Market

Includes: IPE, STPZ, TIP
by: Tom Lydon

A San Francisco-based fund company is planning to get into the ETF business. Exchange Traded Spreads Trust (ETSpreads) has several fixed-income ETFs in the works.

Exchange Traded Spreads Trust (ETSpreads) has filed with the SEC to launch a number of fixed-income ETFs. The first fund planned will focus on Treasury Inflation-Protected Securities (TIPS).

Steve Dew and Oliver Ludwig for Index Universe report that the provider’s TIPS ETF will focus on maturities ranging from five to 10 years. TIPS are designed to protect investors from declining purchasing power by adjusting the principal upward based on increases in the U.S. Consumer Price Index.

The TIPS ETF will be based on the Markit iBoxx TIPS Inflation-Linked 5-10 Index and that it will use ALPS Distributors Inc. as its distributor. The fund will have some competition in the market when it launches, including iShares Barclays TIPS Bond Fund (NYSEARCA:TIP), SPDR Barclays Capital TIPS (NYSEARCA:IPE) and PIMCO 1-5 Year U.S. TIPS Index (NYSEARCA:STPZ).