With spring break fast approaching, many investors view this time of year with distinct travel goals in mind.
Given that spring break is oftentimes viewed as an opportune moment for families to get out and travel, this shouldn’t come as a particular surprise. Whether it’s spring break, the winter holidays, or the summer months, investors can look to these seasons as consistent opportunities to plan annual travel.
That said, while seasonal travel opportunities tend to remain the same each year, macroeconomic conditions certainly do not. For instance, the trajectory of the Federal Reserve’s ongoing fight against inflation still remains relatively uncertain. As such, it’s difficult to project where inflation will sit during next year’s travel season, let alone for the following years.
However, the flexibility and innovation the ETF wrapper offers can help address this problem. One way for investors to plan for travel goals while mitigating the impact of inflation is to use a distribution ladder ETF.
To walk through an example: an investor knows they want to travel with their family on each spring break for the next few years, though they remain worried about how inflation will impact both their spending and savings. To help set themselves up to maintain these travel goals, they could allocate some of their assets to the Northern Trust 2030 Inflation-Linked Distributing Ladder ETF (TIPA).
TIPA aims to provide consistent, inflation-linked income through a laddered portfolio of U.S. Treasury Inflation-Protected Securities (TIPS). Each rung of the fund’s ladder corresponds to a calendar year between 2025 and 2030. Within these funds, a selection of TIPS matures in the respective years.
Crucially, Northern Trust’s portfolio team looks to allocate assets to each of TIPA’s laddered rungs in a relatively even manner. By doing so, they aim to provide a more structured spend-down approach that could accommodate travel needs.
TIPA’s focus on investing in TIPS can naturally help mitigate the impact of inflation over the years. Given that TIPS adjust their value with the CPI, TIPA’s investors could see their payments rise if inflation makes a comeback.
Taken together, this approach can offer a balanced and transparent way to navigate long-term travel plan expenses while accounting for inflation uncertainty. After all, inflation should be the last thing on someone’s mind when they’re about to go on vacation.
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Disclosures:
ETF investing involves risk, and principal loss is possible. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Brokerage commissions will reduce returns. The net asset value of the Northern Trust ETFs will decline over time as income is paid to shareholders. Individual bonds carry an obligation to fully return principal to investors at maturity, however ETFs have no such obligation.
Before investing, carefully consider the investment objectives, risks, charges, and expenses. This and other information is in the prospectus and a summary prospectus, copies of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest.
Northern Funds Distributors, LLC, distributor. Northern Funds Distributors, LLC and FlexShares are not affiliated with Northern Trust.
All investments are subject to investment risk, including the possible loss of principal amount invested. Investments do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Not FDIC insured | May lose value | No bank guarantee
