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Rating:Schwab Launches TIPS Fund for Retirees Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, February 14, 2006

Schwab Launches TIPS Fund for Retirees

Reported by Erin Coe

Charles Schwab Investment Management is introducing a new inflation protected fund for investors at or close to retirement who want both stability and growth.

As a way to balance asset protection with the need for growth in retirement, the San Francisco-based firm is launching the new Schwab Inflation Protected Fund, and suggests it will perform better than traditional TIPS-based funds.

"As the Baby Boomers move into retirement, they need more help in managing the impact of inflation – an important risk to consider, especially for those living on a fixed income," said Evelyn Dilsaver, president and chief executive officer of Charles Schwab Investment Management.

The fund will invest at least 80 percent of net assets in inflation-protected fixed-income securities issued by the U.S. governments, foreign governments and U.S. and foreign corporations. The leftover 20 percent of assets can be invested in fixed-income securities not structured to provide inflation protection, including up to 10 percent of assets in high yield securities.

"Clients are looking for fixed income assets that are not eaten away by inflation," Kimon Daifotis senior vice president and chief investment officer –- fixed income, said. Unlike the TIPS fund, the Schwab fund will seek inflation protection and growth opportunities.

Yet by not investing the entire fund in the U.S. Treasury, it gives investors latitude to hold onto assets that are tied directly to inflation and adjust with CPI.

"There's also a diversifying benefit," Daifotis added. "People don’t want a part where everything is moving in the same direction." 

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