ETFs & TIPS

kidmugsy

I want defensive investments in my Stocks and Shares ISA. I'm tempted by TIPS, the US equivalent of our Index-Linked Gilts. I assume that the way to hold them is as an ETF. Has anyone any observations to make e.g. suggesting a particular ETF, commenting on the tax treatment, or whatever?

Jegersmart

What are you defending against?

Shaolin_Monkey

There's a handful of ETF's -

iShares ITPS
Credit Suisse CIU1
DB X-trackers XUIT (USD share class only)

Can't really comment on the merits of each one beyond the iShares ETF being by far the most liquid. In an S&S ISA you don't have to worry about tax treatment because there is none to pay - they are exempt. Outside an ISA, offshore bond funds with UK reporting status are subject to income tax (up to your highest rate) on distributions and CGT on gains. The income from this type of investment is typically low. The value will be affected by the GBP/USD exchange rate as well as movements in the prices of TIPS.