Breakeven Inflation Rates And TIPS ETFs

October 15, 2014

The results of the analysis were encouraging, so the methodology was used to evaluate the two-year and five-year breakeven inflation rates as well. Across each of the time frames, the results were consistent.

Rotating between TIPS and Treasurys, using the level of the breakeven inflation rate as a trigger appears to be a viable strategy. As it happens, the breakeven rates for each of these time frames are hovering just above 1 standard deviation below the average, signaling it may soon be time to begin a back-rotation into TIPS.

Inflation-Linked Bond ETFs

There are many fine inflation-linked bond ETFs. Let’s review three different kinds that we find interesting.

The takeaway is this: There are plenty of choices in the TIPS ETF market, and it’s wise to keep up on them, as sooner or later, inflationary pressure is likely to start climbing.


CLS Investments is an Omaha, Neb.-based third-party investment manager and ETF strategist. CLS began to emphasize ETFs in individual investor portfolios in 2002, and is now one of the largest active money managers using exchange-traded funds, with more than $2 billion invested. Contact CLS’ Chief Investment Strategist Scott Kubie at 402-896-7406 or at [email protected]. Please click here for a complete list of relevant disclosures and definitions.

 

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