Related: Finding Investing Opportunities In Volatile Times
Investors will typically look at TIPS ahead of an inflationary period since buying TIPS after inflation has gone up means that the security has already priced in the inflation and investors would likely be overpaying for the TIPS exposure.
Potential investors should also be aware that TIPS are generally more volatile than traditional nominal Treasuries due to the inflation adjustments to their principal value.
“TIPS, have proven a winner this year in part as more investors prepare for a pickup in inflation. TIPS have returned about 6 percent in 2016 versus about 4.5 percent for conventional Treasuries, according to index data compiled by Bloomberg. TIPS had underperformed the previous three years,” reports Bloomberg.
iShares TIPS Bond ETF
