Finance scholars Martinelli, Priaulet and Priaulet state that inflation-indexed securities in general including those used in the United Kingdom and France provide efficient instruments to diversify portfolios and manage risk because they have a weak correlation with stocks, fixed-coupon bonds and cash equivalents.
The Fed itself pushed up inflation estimates for this year.
Even though that investor receives their principle plus interest, they are in effect losing money due to the money being worth less when they withdraw it.
Although the investment is guaranteed by the U.
When Treasury yields are dropping, this usually means that investors are moving their money out of low-yielding investments to riskier ones such as stocks.
The adjustments to the principal increase interest income when the CPI rises, thus protecting the holder's purchasing power.