Expert insight

Pro TIPS: Take into account inflation-protected bonds

May 22, 2024

John Madziyire

Vanguard Head of U.S. Treasuries/TIPS

This bar and line chart shows the returns of TIPS and the percentage change in the Consumer Price Index since 2000. TIPS returns ranged from a low of –11.85% to a high of 16.57%, while the percentage change in the CPI ranged from 0.10% to 7.00%. TIPS returns do not appear to track the CPI, and notably diverged in 2011, 2013 and 2022.
This box shows that TIPS are expected to perform best when unexpected inflation is running high and interest rates are falling; it will perform worst when unexpected inflation is running low and rates are rising. In other scenario, TIPS performance may depend on a variety of factors.
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