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TIPS mutual fund returns
Old 11-01-2004, 04:22 PM   #1
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TIPS mutual fund returns

I notice that the YTD return for FINPX, the Fidelity TIPS fund, is 5.63%.

How do they do this? Interest rates now are about the same as they were at the start of the year, and YTD CPI inflation is about 2.3%. I must be missing something?

Peter
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Re: TIPS mutual fund returns
Old 11-01-2004, 04:57 PM   #2
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Re: TIPS mutual fund returns

Quote:
I notice that the YTD return for FINPX, the Fidelity TIPS fund, is 5.63%.

How do they do this? Interest rates now are about the same as they were at the start of the year, and YTD CPI inflation is about 2.3%. I must be missing something?
2.3 CPI + 2.something real + 1.something for capital appreciation = 5.63
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Re: TIPS mutual fund returns
Old 11-02-2004, 03:35 PM   #3
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Re: TIPS mutual fund returns

Thanks, wabmester. After reading your post I looked more closely at what 10-year interest rates have done. Indeed, they are lower now than at the start of the year, so a significant part of the YTD return is capital appreciation, which I had assumed was near zero.

Incidentally, current YTD return for FINPX is 6.41%. The equivalent Vanguard fund, VIPSX, is 6.84%.

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Re: TIPS mutual fund returns
Old 11-02-2004, 04:04 PM   #4
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Re: TIPS mutual fund returns

I continue to scratch my head at the directions of intermediate or longer bond funds right now, but I think some of the capital appreciation for the TIPS funds has been due to anticipation of rising inflation rates, possibly linked to oil prices?
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