TIPS ETFs as an Inflation Hedge

TIPS ETFs as an Inflation Hedge
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ETFs that hold Treasury Inflation-Protected Securities have been popular with investors seeking an inflation hedge because the bonds’ principal is linked to changes in the Consumer Price Index.

However, it’s very important to remember that since the ETFs invest in Treasury bonds, they can be hurt by rising interest rates.

“TIPS will not perform well if real yields rise along with rising interest rates,” said Russ Koesterich, iShares chief investment strategist.

“Despite its inflation protection, fluctuating interest rates still lead to volatility here,” Morningstar adds in an analyst report on iShares Barclays TIPS Bond Fund (NYSEArca: TIP).</…………… continues on ETF Trends

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Pricing subject to change. TIPS
List Price:
Price: 8.49