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Bonds/Ginnie Mae vs. TIPS
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Question
In this downward interest rate environment why are some advisors suggest to buy TIPS.
Maybe they see value and think the Dollar will go down versus other world currencies. That makes things costs more Dollars - which is inflation. If inflation goes up, TIPS do better.
Of course - they are speculating! Sometimes when world markets do poorly, money flows BACK into Dollars and bonds. That drives rates down and checks inflation.
It might also be that they are just advising diversification.
Doug
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Doug Ingram
Expertise
Fixed income portfolio allocation and strategies for institutional investors. Having designed multi-scenario risk quantification and cash flow projection models for nearly 25 years, Strategic Technical Initiatives can answer your regulatory, SFAS 115 allocation, securities selection, and other questions dealing with yield curve placement and portfolio mix strategies. I write the Bond Market Review on behalf of Commerce Street Capital Management.
Experience
Trading and designing portfolio strategies since 1980.
Education/Credentials
Physics and Differential Mathematics
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