FIRE'd@51
Thinks s/he gets paid by the post
- Joined
- Aug 28, 2006
- Messages
- 2,433
I think this is a pretty good article for those considering purchasing TIPS (especially TIPS ETF's) as a hedge against inflation. Basically, it emphasizes that shorter-term TIPS reduce one's exposure to rising real interest rates, which is likely as the economy recovers and demand for borrowing increases. This lower volatility with respect to changing real interest rates increases the correlation with inflation versus those with longer maturities (and greater duration with respect to changing real rates).