TIPS have outperformed Treasuries of similar durations in 2012 on inflation expectations. [Gold, TIPS ETFs Reward Big on Inflation Trade]

For TIPS ETF investors, the inflation “breakeven rate” is important to watch. It is determined by comparing the yields of regulator government bonds against inflation-protected securities of the same duration, usually 10 years. If inflation averages more than the breakeven rate over the next decade, then investors would be better off owning TIPS than normal Treasury bonds.

iShares Barclays TIPS

Full disclosure: Tom Lydon’s clients own TIP and BOND.