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Guarding Against Inflation With CPI Swaps Instead of TIPS
Advisor One
Thu, 21 Feb 2013
For advisors worried about inflation, CPI swaps offer a more efficient hedge because they are a higher-yielding and shorter-duration alternative to TIPS, J.P. Morgan's Cavanaugh says.
TIPS are a good, low-risk way to hedge against inflation , but the CPI measure they are based on is less than perfect, says Research Affiliates' Rob Arnott.
TIPS , real estate, and commodities are great inflation -hedging, liquid investments, says Morningstar's David Blanchett, who details the importance of exposure to these assets.
PIMCO Real Return manager Mihir Worah says TIPS' explicit tie to the CPIindex can help investors manage the unpredictability and volatility of inflation .