Trust in US TIPS to beat inflation

In an inflationary market TIPS, US Treasury Inflation-Protected Securities, are most compelling says Cris Sholto Heaton.

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Bond yields have ticked down recently as investors conclude that central banks have finished hiking. Whether this is right remains to be seen, but my long-standing view is that central banks are always too quick to cut and too slow to hike and so I’d guess that markets are probably correct. 

However, this has little immediate impact on the MoneyWeek asset-allocation strategy that I’ve been reviewing in the last few weeks, since we try not to forecast too much: our goal is to have a portfolio fit for all likely outcomes. With that in mind, the 2%-2.5% real yield on inflation-linked bonds still looks better than conventional bonds. 

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.