TDTT vs TIP: Which ETF Is Better in 2026?
A metric-by-metric comparison of FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (TDTT) and iShares TIPS Bond ETF (TIP) — both US Bonds - TIPS funds — using ETFValuer's daily-updated rankings.
Educational content — not financial advice. Data as of July 25, 2026. ~5 minute read.
The Verdict
TDTT and TIP compete directly — both are US Bonds - TIPS funds chasing the same job in a portfolio. That makes this a genuine either/or: the index each tracks, what it costs, and how it has handled drawdowns are what separate them, not the broad exposure they give you.
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — TIP scores higher: 54.1 (Grade C) versus 52.2 for TDTT. That doesn't make TDTT a bad fund; it means TIP currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Head-to-Head: Every Metric
| TDTT | TIP | |
|---|---|---|
| Category | US Bonds - TIPS | US Bonds - TIPS |
| Expense ratio | 0.18% | 0.18% |
| Fund size (AUM) | $2.6B | $14.7B |
| Dividend yield | 4.57% | 1.16% |
| 1-year return | +2.88% | +2.40% |
| 3-year return | +15.08% | +10.81% |
| Volatility | 1.91% | 3.45% |
| Max drawdown | -1.52% | -4.37% |
| Sharpe ratio | -1.11 | -0.75 |
| ETFValuer score | 52.2 | 54.1 |
| Grade | C | C |
| Overall rank | #364 | #341 |
Bold marks the better value in each row. "Better" is directional only (e.g. lower cost, higher return) — it isn't a recommendation by itself. See the full methodology.
Cost
On cost, the two are essentially tied — TDTT charges 0.18% a year versus TIP's 0.18%. A difference this small (about $0.00 a year on a $10,000 position) isn't a reason to choose one fund over the other.
What TDTT's Fees Cost You
TDTT charges an expense ratio of 0.18% a year, deducted automatically from the fund's value. Small percentages compound into real money — adjust the figures below to see the impact on your own numbers.
Assumes a constant gross return and no additional contributions — a simplification, but it isolates exactly what the expense ratio costs. Try the full fee calculator to model contributions and compare any two funds.
Performance & Risk
Over the trailing 3 years, TDTT returned +15.08% versus +10.81% for TIP — a gap of about 4.3 percentage points. On risk, TDTT has held up better historically, with a shallower max drawdown (-1.52% vs. -4.37%). TIP currently has the better risk-adjusted return (Sharpe ratio of -0.75 vs. -1.11), meaning it delivered more return per unit of volatility taken on.
How Closely Do They Track Each Other?
Over the last 3.0 years of daily returns (752 shared trading days), TDTT and TIP show a strong correlation of 0.872 — clearly related, with room to diverge. There is some genuine differentiation here, but not enough to call these complementary holdings. Pairing them mostly concentrates risk rather than spreading it.
| Measure | Value | What it means |
|---|---|---|
| Daily return correlation | 0.872 | Strong — clearly related, with room to diverge |
| R-squared | 76.1% | 76.1% of TDTT's daily moves are explained by TIP's |
| Tracking error (annualised) | 2.68% | Typical yearly spread between the two funds' returns |
| Annualised return over 3.0y | TDTT +4.90% · TIP +3.42% | TDTT ahead by 1.48 points a year |
Correlation alone understates how far these can drift. Across every rolling 12-month window in the period, TDTT finished as much as +2.7 points ahead of TIP at the best extreme and -1.9 points at the worst — a 4.6-point spread between the best and worst year of relative performance. Two funds can correlate tightly day to day and still deliver very different outcomes over any single year you happen to hold them.
Calculated from daily total returns over the trailing 3-year window, recomputed every day this site refreshes. Correlation of 1.00 means the two funds moved in lockstep; 0.00 means their daily moves were unrelated.
Holdings Overlap
TDTT and TIP hold 1 of the same companies among their top 10 positions. Those shared names make up 64.9% of TDTT and 35.7% of TIP. That's modest duplication — the funds are mostly distinct at the top, so holding both can still add diversification.
| Shared Holding | TDTT Weight | TIP Weight |
|---|---|---|
| United States of America | 64.94% | 35.67% |
Compares the top 10 reported holdings from each fund's most recent SEC N-PORT-P filing, so it understates total overlap — funds tracking similar indexes overlap far more deeply than the top 10 alone can show. Search any company across all tracked funds with the Stock Overlap tool.
Which One Should You Pick?
Lean TDTT if…
- Current income matters to you — it yields 4.57% against 1.16%
- It has been the calmer ride (1.9% volatility vs 3.5%) with a shallower worst-case fall (-1.5% vs -4.4%)
- You weight recent results heavily — it returned 15.1% over 3 years against 10.8%
Lean TIP if…
- You care about return per unit of risk — its Sharpe ratio of -0.75 beats -1.11
- You want the deeper, more liquid market ($15B in assets vs $3B)
Whichever you pick, holding both at full weight is usually the wrong answer — see the overlap and correlation sections above.
Frequently Asked Questions
Is TDTT or TIP better?
On ETFValuer's overall model — which blends return, risk-adjusted performance, cost, drawdown, size and volatility — TIP scores higher: 54.1 (Grade C) versus 52.2 for TDTT. That doesn't make TDTT a bad fund; it means TIP currently edges it out on this specific mix of factors. Read the metric-by-metric breakdown below before deciding which matters more for your own portfolio.
Which has the lower expense ratio, TDTT or TIP?
TIP currently has the lower expense ratio (0.18% vs. 0.18%).
Can I hold both TDTT and TIP?
You can, though the benefit is limited. At a correlation of 0.87, TDTT and TIP fall together far more often than not, so owning both adds complexity and a second expense ratio without much real diversification. Most investors are better served picking one.
Go deeper on either fund
Full daily-updated metrics, holdings context, and category peers.