Tips should not be pushed as a cure-all. Say inflation and interest rates go up by 5%. Yes your bond will go up by 5% for the inflation but will go down by 50% (5% x duration) because of the interest it pays. TIPS will still leave you exposed 90% to the problem. Not much of a hedge!
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Tips should not be pushed as a cure-all. Say inflation and interest rates go up by 5%. Yes your bond will go up by 5% for the inflation but will go down by 50% (5% x duration) because of the interest it pays. TIPS will still leave you exposed 90% to the problem. Not much of a hedge!
Dec 23 16:57 pm
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