Inflation is also beginning to tick higher after years of quantitative easing and as the economy continues to expand.
“TIPS have had a good tail wind this year. We have inflation as opposed to last year when we had disinflation,” Gemma Wright-Casparius, who oversees Vanguard’s inflation-protected securities fund, said in a Reuters article.
The Consumer Price Index has increased 2% year-over-year for four consecutive months and is expected to accelerate to 2.2% later this year and into 2015.
TIPS-related ETFs also help provide another layer of diversification as many aggregate bond funds do not include Treasury Inflation Protected Securities.
For more information on Treasury Inflation Protected Securities, visit our TIPS category.
Max Chen contributed to this article.