Our strategists’ research confirmed what they had expected—that Vanguard’s retail clients with taxable or IRA accounts had increased their direct investment in TIPS funds in 2021. “At a granular level, the data showed that investors’ holdings directly through TIPS funds increased substantially in 2021 compared with before the inflationary shock in 2019 and 2020,” De Luca said.
At the same time, investors’ overall allocation to TIPS, which comes largely through target-date funds (TDFs), was about the same as before. “Despite the increase in the direct holdings of TIPS funds, most investors with TIPS exposure still get it through TDFs, and that number didn’t change much. And on average, investors’ TIPS allocations still fell short of the levels suggested by Vanguard’s TDF glide path.”
(Note that while a glide path is a reasonable place to start, it’s based solely on age and not on other factors important to investors, such as investment objectives, personal risk tolerance, time horizon, or other inflation-fighting assets they may hold.)
Here are the key findings of the research: