No. of Recommendations: 12
My main question about WIP is that it appears to have a rather bleak long-term performance record. I suppose that's less significant when the objective is simply to keep from getting your ass royally kicked.
It's probably better than you think. WIP has a bunch of moving parts going on, and they're not all obvious.
One thing is that, rather obviously, it's a collection of non-US currencies, but is quoted in US dollars. The US dollar is a currency with one of the greater variability ranges. For example, the USD soared about 21-22% in 2021-2022, so WIP seems to have crashed when measured in dollars, but of course it was holding its value and offering a return in terms of real purchasing power. It's just that the yardstick changed size. The dollar fell in 2025, and WIP seemed to soar--again, measured in dollars of variable size.
Second, interest rates were tiny or negative all around the world a few years ago. They always have some fraction in bonds of moderately long duration, so the trend of globally rising rates hit their asset value to a certain extent. Since we are now in a regime of globally higher real rates, this problem is pretty much in the past. (of course, rates could soar even more, but that would probably be in the face of inflation which these bonds are designed to protect against reasonably well...). Yields for a purchaser today should be pretty good.
Lastly, what's really hard to get your head around, is the way that inflation protected bonds work in various countries. Your return might show up as a capital gain, or as an increased coupon, and you never know which. So over time the fraction of the return of WIP coming from coupons varies with the interest rate cycles. So if you're looking at a long term chart, be sure to check one that includes reinvested dividends. Stockcharts.com is a site that includes dividends by default. They also let you do a comparison chart with $USD, so you can see how much of the price swing is really just the dollar going up and down.
All that being said, the return is likely to be low. This is not a "get rich" kind of thing, it's a "stay rich" kind of thing. Given the level of asset preservation that it offers, it's remarkable that it offers a positive real yield at all rather than having to pay for the privilege. I met with some private bankers recently to see if they could clone it for me, or a simplified version. WIP itself is very tax inefficient for me. The underlying government bonds are tax free, and I have no income tax where I live on this type of asset, but because the WIP structure is domiciled in the US, the US takes 30% off the top which I can't credit against anything.
FWIW, average yield-to-worst among the holdings is currently 7.07%. But given that these are inflation protected bonds, I really don't know how they calculate that. The average coupon is only 1.96%, so it seems the bulk of the forward return is showing up as rising NAV. If you check the coupon yield, it is substantial but has been trending steadily downwards, again because of the point in the cycle.
Jim
