Many advisors tout the benefits of Treasury Inflation-Protected Securities because they think TIPS are the best vehicle for protecting portfolios from inflation. While TIPS were created with good intentions, these Treasury bonds fail to fulfill the purpose for which they were established.
During periods of inflation, generating consistent returns is often a challenge for investors as purchasing power decreases. In essence, the money lent through bonds during inflationary periods provides significantly lower purchasing power once it is paid back.
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