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Inflation-Indexed Securities
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Inflation-indexed securities
Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities
A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.


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Break even inflation rates in the Treasury Inflation Indexed Securities (TIPS) market have moved up sharply and are now much closer to historical norms.
2% 4 BBH Inflation Indexed Securities Fund/N (BBHIX) +11.
Given the large yield differentials traditional instruments would have to offer to be competitive with inflation indexed securities we believe a decline in real yields on TIPS to be the more likely scenario.
 
 
 
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