TIP vs Short Treasury (SHY)
TIP (iShares TIPS Bond ETF, modified duration ~7 years, AUM ~$22 billion) shows a trailing 12-month yield of approximately 4.5 percent and a 30-day SEC yield of approximately 2.5 percent in April 2026. SHY (iShares 1-3 Year Treasury, duration 1.9 years, AUM ~$25 billion) shows a 30-day SEC yield of approximately 3.81 percent.
Also known as: TIPS (TIP) (ETF_TIP, TIPS) · 1-3Y Treasury (SHY) (ETF_SHY)
Why This Comparison Matters
TIP (iShares TIPS Bond ETF, modified duration ~7 years, AUM ~$22 billion) shows a trailing 12-month yield of approximately 4.5 percent and a 30-day SEC yield of approximately 2.5 percent in April 2026. SHY (iShares 1-3 Year Treasury, duration 1.9 years, AUM ~$25 billion) shows a 30-day SEC yield of approximately 3.81 percent. The TIP/SHY ratio sits near 1.30. The pair captures duration risk plus inflation protection (TIP) versus cash-equivalent short Treasury carry (SHY). TIP outperforms when real yields fall; SHY outperforms when real yields rise faster than realized inflation, as it did during the 2022 hiking cycle.
What TIP and SHY Capture
TIP (iShares TIPS Bond ETF) holds U.S. Treasury Inflation-Protected Securities with remaining maturity above 1 year. April 2026 portfolio characteristics: trailing 12-month yield approximately 4.5 percent, 30-day SEC yield approximately 2.5 percent, modified duration approximately 7 years, expense ratio 0.18 percent, AUM approximately $22 billion. The TTM yield reflects inflation accruals (CPI adjustments to principal) plus coupon income; the 30-day SEC yield reflects only the current real yield on the portfolio.
SHY (iShares 1-3 Year Treasury Bond ETF) holds nominal Treasury bonds maturing in 1 to 3 years. April 2026: 30-day SEC yield approximately 3.81 percent, modified duration 1.9 years, expense ratio 0.15 percent, AUM approximately $25 billion. SHY is functionally a cash-plus instrument; TIP is a real-yield duration trade. The pair captures the trade-off between earning carry on short nominal Treasury versus taking duration risk for inflation protection.
Duration vs Cash-Equivalent Distinction
TIP duration of 7 years means a 100 basis point real yield rise produces approximately 7 percent TIP price decline. SHY duration of 1.9 years means a 100 basis point yield rise produces 1.9 percent decline. The 3.7x duration ratio is the dominant driver of pair behavior in any rate-shock environment.
The trade-off is ex-ante carry versus ex-post total returns. SHY locks in approximately 3.81 percent annualized for 12 months with minimal duration risk. TIP locks in 2.5 percent real for approximately 7 years with full duration risk; inflation accruals add to total return if CPI rises faster than the breakeven priced (currently 2.44 percent on 10-year breakeven). At purchase, TIP investors are betting realized inflation will exceed 2.44 percent; SHY investors are taking nominal yield with no inflation exposure and minimal interest-rate exposure.
The Yield Curve and TIP-SHY Spread
TIP yield decomposes as: real yield (approximately 1.87 percent on 10-year TIPS) plus expected inflation (approximately 2.44 percent breakeven) equals approximately 4.31 percent nominal-equivalent yield to maturity. SHY yield (approximately 3.81 percent) reflects the front-end nominal Treasury curve.
Conditional Forward Response (Tail Events)
How 1-3Y Treasury (SHY) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in TIPS (TIP). Computed from 1,285 aligned daily observations ending .
Following these triggers, 1-3Y Treasury (SHY) falls 0.09% on average over the next 5 sessions, versus an unconditional baseline of -0.02%. 128 qualifying events; 1-3Y Treasury (SHY) closed positive in 34% of them.
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Frequently Asked Questions
What is TIP yield vs SHY yield in April 2026?+
TIP shows a trailing 12-month yield of approximately 4.5 percent (reflecting inflation accruals plus coupon) and a 30-day SEC yield of approximately 2.5 percent (current real yield on the portfolio). SHY shows a 30-day SEC yield of approximately 3.81 percent. The TTM yield comparison favors TIP, but the SEC yield comparison favors SHY because the TIP SEC yield does not include inflation accruals that boost total return when CPI rises. For total-return forecasting, the TTM yield is the more relevant number.
How does duration affect TIP vs SHY returns?+
TIP modified duration is approximately 7 years; SHY duration is 1.9 years. A 100 basis point yield rise produces approximately 7 percent TIP price decline vs 1.9 percent SHY decline, a 3.7x ratio. The duration gap is the dominant driver of pair returns in any rate shock. The 2022 episode (10-year TIPS yield rose 260 basis points) produced TIP minus 18 percent vs SHY minus 4 percent peak-to-trough, a 14 percentage point underperformance for TIP.
When does TIP outperform SHY?+
TIP outperforms SHY when real yields fall (typically during Fed easing cycles, recessions, or growth-disinflation episodes) or when realized inflation exceeds priced breakevens. The 2009 to 2012 period saw TIP plus 25 percent vs SHY plus 4 percent as real yields fell to negative territory and breakevens rebuilt. The 2020 to 2021 reflation saw TIP plus 12 percent vs SHY flat. The 2024 to 2026 stable-real-yield-plus-positive-CPI environment has produced TIP plus 12 percent vs SHY plus 9 percent.
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