Deep Dive: Investors abandoning TIPS on falling inflation 'misunderstand' performance drivers

Necessary as ‘stubborn’ inflation lingers

Eve Maddock-Jones
clock • 4 min read

Despite inflation declining in recent months, managers have argued that inflation linked assets still have a key role to play as inflation has become more embedded and the risk of unexpected shocks has increased.

This week (19 June), the UK saw inflation return to the 2% target for the first time since 2021, while last month US consumer price inflation came in at 3.3%, a far cry from the double digits seen in 2023. With inflation expected to continue on this downward trend, Stuart Chilvers, Rathbone Strategic Bond manager, said it could be "natural" to assume that inflation linked bonds "are not a particularly exciting" in that environment. "However, they misunderstand how they are valued and what causes them to outperform or underperform," he said. BoE hold 'made sense' amid General Electi...

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