TIPS have suddenly moved to center stage for investors, as the surge in inflation has drawn new interest in Treasury inflation-protected securities.
But how much do investors really know about these securities, other than their alluring name?
Yes, TIPS may have a role to play in many portfolios, investment pros say. But some investors who take the plunge with TIPS might find they are more convoluted than conventional bonds: Their value is harder to measure and there are daunting tax wrinkles. Rising interest rates can hit their valuation. And recent declines in TIPS’ auction prices, along with other market signals, suggest some investors believe inflation may cool off, which could also hurt their returns..
With all that in mind, we answer some commonly asked questions about TIPS:
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