TIP Lost $36,720 on $300,000 in 2022, the Year It Was Built For

Picture a retired person who put $300,000 into the iShares TIPS Bond ETF (NYSEARCA:TIP) at the December 31, 2021 close to protect against rising prices. By the December 30, 2022 close, the position was worth $263,280. That is a $36,720 loss on a dividend-adjusted basis. This happened in a year of high inflation, exactly the situation people buy this fund for.

Our dollar example uses dividend-adjusted market prices from the last close of 2021 to the last close of 2022. That represents a -12.24% decline. Its benchmark, the ICE U.S. Treasury Inflation-Linked Bond Index, returned -11.85%, according to the fund’s fact sheet as of September 30, 2026.

Two Promises Inside One Bond

The BlackRock iShares fact sheet says TIPS “can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment.” The same document’s fixed income risk disclosure warns that “typically, when interest rates rise, there is a corresponding decline in bond values.”

Both statements are true at the same time. When consumer prices rise, each TIPS bond’s principal goes up, so the bond pays more in dollars. But TIPS still trade in a market. When interest rates rise, new bonds come with better terms, so older bonds lose market value. In 2022, that second effect exceeded the first. Inflation protection and price protection are two separate features, and TIP delivers only the first.

Duration Is the Risk Dial Most Retirees Never Check

Duration (how much rate changes move a bond’s price) explains the damage. TIP’s effective duration is 6.18 years as of September 30, 2026, and is defined by BlackRock iShares as a measure of “the sensitivity of a bond’s price to changes in interest rates.”

Put simply, a fund with a duration in that range is significantly exposed to rate moves. The higher the number, the harder the price swings when rates shift. That figure tells you more about how the fund behaves when rates jump than the word “inflation” in its name does.

Where TIP Stands After Its 2022 Loss

The recovery is real but mixed. Calendar NAV returns were 3.68% for 2023, 1.89% for 2024, and 6.71% for 2025. As of September 30, 2026, BlackRock iShares lists TIP’s one-year NAV return at -2.14%, its five-year annualized NAV return at -0.17%, and its ten-year annualized NAV return at 1.98%. As of October 20, 2026, the 30-day SEC yield (a standardized measure of income) was 5.17%, per BlackRock iShares.

Costs are low. The fund’s expense ratio is 0.18% with 48 holdings as of September 30, 2026. The fund held about $14.6 billion in net assets as of July 31, 2026, according to its latest portfolio filing.

What TIP Got Right, and Why It Still Stung

On the principal side, TIP did what TIPS are designed to do. Over long holding periods, the inflation adjustment maintains purchasing power. The portfolio holds U.S. Treasuries, so credit risk is close to zero. The product worked as designed. Expectations were the problem.

Taxes add a quieter cost in taxable accounts. Inflation adjustments to TIPS principal count as taxable income in the year they are earned, and the fund passes them on to holders as distributions. TIP paid $1.438357 per share with an ex-dividend date of September 1, 2022, its largest listed payout that year, while its price was falling. A holder could owe tax on income from a position that lost money.

Who TIP Suits and What to Check Before Buying

TIP suits investors with holding periods at least as long as the fund’s duration. That investor wants Treasury-backed purchasing power over a decade and can ride out price drops along the way. TIP is a poor short-term inflation shield for money a retired person plans to spend within a few years. A double-digit drawdown in year one of retirement does far more damage than the same drop a decade in, which is the sequence-of-returns problem we walked through in a free guide to defending the first five years. Before you count on TIP for protection, check three things: the fund’s effective duration compared with when you need the money, the tax status of the account you hold it in, and how it performed in 2022. If a double-digit drop in a high-inflation year would force you to sell, answer the duration question before anything else.

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