No TIPS fund's returns can instantaneously protect you from inflation. Or any interest rate increases, for that matter. It's the same for a nominal bond fund when interest rates increase. Instead, what happens is the underlying bonds cash flows are adjusted for inflation. If you go back and look at the distributions thrown off by your bond fund, you'll see that they increased when inflation increased. Presumably you're having these reinvested back into your fund and eventually you're likely to increases in your fund's returns. It requires patience, though.Years ago I purchased vipsx shares with the hope that they will "protect" from inflation. We have been having inflation for a while but this fund returned for 3, 5 and 10 years respectively: -1.30%2.70%2.00%.
Can someone explain how did this fund protect during inflationary periods? Thanks.
Cheers.
Statistics: Posted by dcabler — Mon Apr 29, 2024 6:11 am — Replies 11 — Views 756