Following Vanguard’s stated plans to expand into fixed income, Vanguard recently announced the following new bond ETFs (press release):
- Vanguard Total Inflation-Protected Securities ETF (VTP). Seeks to track the performance of an index of the full market of inflation-protected public obligations of the U.S. Treasury including short-, intermediate-, and long-term maturities. Expense ratio of 0.05%.
- Vanguard Total Treasury ETF (VTG). Seeks to track the total U.S. Treasury bond market including short-, intermediate-, and long-term maturities. Expense ratio of 0.03%.
- Vanguard Government Securities Active ETF (VGVT). Actively-managed bond ETF that seeks to outperform the benchmark (Bloomberg Government Total Return Index) with an expense ratio of 0.10%.
In my opinion, the most notable addition here is the Vanguard Total Inflation-Protected Securities ETF (VTP) because the only previous TIPS ETF available was Vanguard Short-Term Inflation Protected ETF (VTIP). Finally, we have an ETF option for those that want a longer-duration TIPS ETF with usually a higher real yield and thus higher expected long-term return for long-term holders. Of course, this also comes with higher real interest rate risk, meaning higher volatility and price fluctuations with changes in the real yield.
In contrast, there are already multiple Treasury ETFs from Vanguard with your choice of short-term (VGSH), intermediate-term (VGIT), or long-term (VGLT) flavors.
My current pick in this category, the Schwab U.S. TIPS ETF (SCHP) currently has a lower expense ratio at 0.03%. I hope that VTP will also become cheaper as the assets grow.
I personally only use TIPS ETFs in taxable brokerage accounts because they simplify the “phantom tax” situation with individual TIPS in those accounts. Otherwise, in my tax-sheltered accounts, I try to just own the individual TIPS directly since I am manually building a long-duration ladder.
Overall, Vanguard entering a sector is a good thing, as more competition is better. Vanguard also recently announced new extremely short-term Treasury ETFs including the Vanguard 0-3 Month Treasury Bill ETF (VBIL), which are potential cash/T-bill alternatives.
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If the goal is long-term inflation-protected income, does a TIPS ETF really even meet that goal? The rate risk makes it not really protected income because you can lose value, whereas individually-held TIPS provide a guaranteed source of inflation-protected income if you hold to maturity. I’ve felt burnt by owning bond funds, and for a while a TIPS fund that did horribly until I converted to individual TIPS–all in a retirement account. I’m also building a TIPS ladder, with my plan to replace what my social security income would be from early retirement (58ish) until 70 when I start taking social security. For other bonds, I’m buying agency bonds with long terms and 3-year workout dates when I can find them for regular bonds. I’m not sold on bond funds, and when people try to say they are equivalent to owning individual bonds like stock funds are for stocks, I don’t buy it.
If you have a target maturity and the goal is inflation-matched income, then definitely a manual ladder is best.
But if you basically want bonds with an inflation-linked hedge, then I think a TIPS ETF will still work. If unexpectedly high inflation occurs, then I would figure the TIPS ETF will outperform a similar duration set of nominal Treasury bonds.
If you have a long investment horizon, I feel the rate risk should wash out over all the reinvestments vs holding the same bonds individually. Even if I just keep buying 5-year Treasuries and make my own ladder, I will still have rate risk every time I need to buy a new Treasury.
Is there a good way or source to compare these for savings like emergency funds? For example I use VUSXX (https://investor.vanguard.com/investment-products/mutual-funds/profile/vusxx) and evaluate it as:
* 4.22% 7 day SEC yield (as of 7/25/25)
* 0.07% expense ratio (my understanding is the SEC yield takes this into account so you can just compare SEC yields)
* Generally state/local tax free (100% in 2024, 80% in 2023, looks like ~94% for 2025 if I’m reading it correctly)
* Using Fidelity’s calculator (https://digital.fidelity.com/prgw/digital/taxyieldcalc/) this would be the equivalent of a ~4.8% CD in my area assuming 100% treasuries.
SCHP as you mentioned appears better as:
* 4.48% 30 day SEC yield (as of 7/24/25 — I’m unsure if 7 and 30 SEC yields can be directly compared)
* 0.03% expense ratio (unimportant if the SEC yield takes this into account, but even better if it does not)
* 100% in U.S. Govt securities (I assume 100% tax free or close to it [those pesky repurchase agreements])
* Equivalent to a 5.1% APY CD according to Fidelity
Assuming the above is correct, or at least wrong in equivalent ways that wash out (appreciate it if you can confirm), VBIL looks like a safer bet than VUXSS as the 30 day SEC yield is 0.01% lower but is guaranteed to be 100% state/local tax free while VGVT would be better with a 0.03% higher 30 day SEC yield, again assuming 100% govt obligations and expense ratio covered in yield.
VTP is the hardest to evaluate because it strangely has a very low 1.53% 30 day SEC yield and a note I don’t understand
> G-DOES NOT INCLUDE ANY INCOME ADJUSTMENT RESULTING FROM CHANGE IN INFLATION RATE
Finally, would you adjust anything to take into account that VUSXX is a money market fund at $1/share while the ETFs will vary? If so, how?
Thanks for reporting on this!