Treasury inflation protected securities ETF

Right now we are globally in period of low interest rates and low inflation rate. In some economies even with deflation. What should we do when inflation will start to rise again? How to invest money when inflation is inching up?

The best investments against inflation are investing in gold, index linked bonds, national savings index linked certificates, shares and property.

I will focus more on less risky inflation protected securities like TIPS (Treasury inflation protected securities) or "linkers" (inflation indexed bonds/gilts). Coupon payments reflect rising inflation and/or interest rates. TIPS are generally one of the safest investments. It should be a part of retirement or standard portfolio for better diversification.

There are already some ETFs following TIPS indexes like iShares Barclays TIPS Bond (TIP) or SPDR Barclays Capital TIPS (IPE). Recently PIMCO launched their exchange traded funds for inflation hedging PIMCO BROAD U.S. TIP (TIPZ) and PIMCO 15+ Yr. US TIPS Index Fund (LTPZ) and PIMCO 1-5 Year US TIPS Index Fund (STPZ).

These funds protect against US inflation. International exposure provides fund SPDR DB Intl Govt Infl-Protected Bond (WIP) which access inflation protected securities in 18 countries. Around 70 % of its portfolio come from foreign developed countries and 30 % from emerging markets. Regionally holdings include securities from France, UK, Canada, Japan, Brazil, Turkey or South Africa. Contrary to US TIPS this fund offers another diversification against weakening US dollar as international bonds are in 15 different currencies.

Municipal bonds (Munis) as a ETF.

This rainy season is attracting attention to municipal bonds from several reasons. FED is cutting interest rates which boosting bond prices. If Democrats win Presidential election, most probably they enhance muni's tax advantages. Apart from, single A rated munis are having 80 times lower historical default rate (0.0084) than triple triple AAA corporate bonds. Merrill Lynch municipal index has in 2007 3,29% return which is less than half of average return during last 19 years. On the other side, faith in triple A munis was hit by CDO losses at Ambac (ABK) and MBIA (MBI).

Municipal bonds can be bought indirectly via fund or ETF. Among funds I'd point out Oppenheimer Rochester National Municipals (ORNAX) and less aggressive Legg Mason Partners Managed Municipals (SHMMX).
This segment is just developing among ETF issuers. Van Eck Global issued on Janaury couple of ETF underlying municipal bonds like:

Lehman Brothers AMT-Free Intermediate Municipal Index ETF (ITM)
Lehman Brothers AMT-Free Long Municipal Index ETF (MLN)
Lehman Brothers AMT-Free Intermediate Municipal Index ETF (ITM)
Lehman Brothers AMT-Free Long Municipal Index ETF (MLN)