--- title: "War-Linked Oil Shock Revives Inflation Trade, But ETF Investors Could Be Repeating A 2022 Mistake" type: "News" locale: "en" url: "https://longbridge.com/en/news/287972924.md" description: "Rising inflation and an oil shock are driving investors back to TIPS ETFs, but strategists warn of repeating 2022's mistakes. Recent inflation data shows a 3.8% year-over-year increase, prompting net inflows into TIPS ETFs. However, experts caution that TIPS ETFs carry interest-rate risks, as they do not guarantee principal value like individual TIPS bonds. Floating-rate Treasury ETFs are emerging as a safer alternative, adjusting more quickly to interest rate changes. Investors are reminded that inflation protection does not equate to protection from rising interest rates." datetime: "2026-05-28T20:59:22.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287972924.md) - [en](https://longbridge.com/en/news/287972924.md) - [zh-HK](https://longbridge.com/zh-HK/news/287972924.md) --- # War-Linked Oil Shock Revives Inflation Trade, But ETF Investors Could Be Repeating A 2022 Mistake Fresh inflation data is putting TIPS ETFs back under the microscope, raising a familiar question for investors: Are inflation-protected bond funds headed for another letdown just as inflation fears heat up again? The **Federal Reserve's** preferred inflation gauge climbed to its highest level in nearly three years in April as the **Strait of Hormuz** **energy shock** continued to ripple through the economy. Headline **Personal Consumption Expenditures** inflation accelerated to 3.8% year over year, while gasoline and other energy goods surged 5.5% month over month after a 20.9% spike in March. That backdrop has pushed investors back toward Treasury inflation-protected securities, or TIPS, ETFs. Yet the category's recent performance suggests many investors may still underestimate the interest-rate risks embedded in these funds. The largest TIPS ETFs have seen net inflows since the Iran conflict escalated in late February despite rising inflation concerns. The **Schwab U.S. TIPS ETF** (NYSE:SCHP) has gained $113 million, according to ETFDb data, while the i**Shares TIPS Bond ETF** (NYSE:TIP) saw $826 million in inflows. The **State Street SPDR Portfolio TIPS ETF** (NYSE:SPIP) also saw net inflows during this period. ## Why TIPS ETFs Can Still Lose Money During Inflation The recent weakness may appear modest, but strategists cited by _MarketWatch_ say it highlights a structural issue with TIPS ETFs that became painfully clear during the 2022 inflation shock: Inflation protection does not eliminate duration risk. One expert explained that buying a TIPS ETF isn't the same as buying a TIPS bond, because a TIPS ETF doesn’t hold its underlying bonds to maturity, increasing the risk of getting back less principal. Unlike individual TIPS bonds, which guarantee investors receive an inflation-adjusted principal value if held to maturity, TIPS ETFs continuously trade baskets of inflation-linked securities across varying maturities. That leaves funds exposed to bond-price declines when interest rates rise. The distinction became critical in 2022, when investors rushed into inflation-protected funds expecting them to offset soaring prices, only to discover that aggressive Federal Reserve rate hikes crushed bond valuations across the market. **BlackRock's** TIP posted losses of more than 12% in 2022. Meanwhile, the SCHP lost more than 6% during the same year, according to FactSet data. ## Floating-Rate Treasury ETFs Are Emerging As An Alternative Still, fixed-income strategists warn that many retail investors may once again be treating TIPS ETFs as direct inflation insurance rather than long-duration bond funds with inflation-linked features. According to MarketWatch, **TD Securities** explained that investors in 2022 were "unpleasantly surprised" after inflation-protected funds failed to shield portfolios from losses during the Fed's tightening cycle. That concern is drawing attention toward floating-rate Treasury ETFs, which are designed to adjust more quickly to changing interest rates. Treasury floating-rate notes may offer cleaner protection against persistent rate volatility because their coupons reset higher as rates rise. Funds such as the **WisdomTree Floating Rate Treasury Fund** (NYSE:USFR) have begun benefiting from that shift in positioning. The ETF has gained more than $930 million since Feb 28. For ETF investors, the latest inflation spike may be reviving the same lesson the market learned during the post-pandemic inflation surge: Inflation protection is not the same thing as protection from rising interest rates. **Read Also: Small-Cap ETFs Are Beating The S&P 500 — But A Quality Problem May Be Building Underneath** _Photo: Shutterstock_ ### Related Stocks - [TIP.US](https://longbridge.com/en/quote/TIP.US.md) - [SCHP.US](https://longbridge.com/en/quote/SCHP.US.md) - [TDTT.US](https://longbridge.com/en/quote/TDTT.US.md) - [SPIP.US](https://longbridge.com/en/quote/SPIP.US.md) - [STPZ.US](https://longbridge.com/en/quote/STPZ.US.md) - [VTIP.US](https://longbridge.com/en/quote/VTIP.US.md) - [STIP.US](https://longbridge.com/en/quote/STIP.US.md) - [BLK.US](https://longbridge.com/en/quote/BLK.US.md) - [USFR.US](https://longbridge.com/en/quote/USFR.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [BTX.US](https://longbridge.com/en/quote/BTX.US.md) - [BIT.RT*.US](https://longbridge.com/en/quote/BIT.RT*.US.md) - [BDJ.US](https://longbridge.com/en/quote/BDJ.US.md) - [BSTZ.US](https://longbridge.com/en/quote/BSTZ.US.md) - [BIT.RT.US](https://longbridge.com/en/quote/BIT.RT.US.md) ## Related News & Research - [Rising interest rates are a danger for markets—and a reason to own TIPS](https://longbridge.com/en/news/293790142.md) - [You are missing the bond deal of the decade - and it is guaranteed to beat inflation](https://longbridge.com/en/news/292786223.md) - [Will tough talk be enough? 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