Schwab U.S. TIPS ETF

The Schwab U.S. TIPS ETF trades on the New York Stock Exchange under the ticker symbol SCHP. (Note: SCHB is actually the ticker for the broader Schwab U.S. Large-Cap ETF). SCHP specifically tracks an index of U.S. Treasury Inflation-Protected Securities. It is one of the most popular funds for investors seeking direct inflation hedges.

The fund invests in Treasury Inflation-Protected Securities (TIPS), which are government bonds where the principal value is adjusted based on changes in the Consumer Price Index (CPI). If inflation rises, the principal of the underlying bonds increases, leading to higher interest payments. This provides investors with a direct hedge against rising consumer prices.

The Schwab U.S. TIPS ETF is known for being one of the most cost-effective funds in its category, boasting an extremely low expense ratio. The expense ratio is typically around 0.03%, meaning investors pay roughly three dollars a year for every $10,000 invested. This makes it highly attractive for long-term, buy-and-hold investors.

Yes, the Schwab U.S. TIPS ETF distributes dividends to its shareholders on a monthly basis. These distributions consist of the interest income generated by the underlying TIPS bonds, as well as the inflation adjustments to the principal. The yield fluctuates based on prevailing interest rates and current inflation data.