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Are TIPS as Safe as You Think?

Morningstar's Eric Jacobson offers a formula to gauge whether TIPS are cheap or expensive compared with other assets but also warns of potential risks should long-term yields rise.

Christine Benz: Hi, I'm Christine Benz for Morningstar. In many respects, Treasury Inflation-Protected Securities would seem to be the ideal choice for retirees, delivering a safe inflation-adjusted stream of income. But in recent years some market watchers have begun to question how safe TIPS really are? Joining me to discuss this question is Eric Jacobson. He is director of fixed-income fund research for Morningstar.

Eric, thank you so much for being here.