No Borders for Inflation-Linked Government Bonds

Inflation is increasingly a global concern. Yes, the risk is still far below the levels that raged in the 1970s and early 1980s, but investors are starting to worry nonetheless. Certainly it’s a sign of the times when the indomitable Ben Stein is wary.

One measure of the collective anxiety can be found in the rising demand for inflation-indexed government bonds. The Lehman Brothers U.S. Treasury TIPS index has risen 13.2% for the year through May 31, vs. 6.9% for U.S. bonds generally via the Lehman Aggregate.

Like so many trends in finance, going global is now part of the game, and inflation-linked government bonds are no exception. In ETF land, for example, one can choose between inflation-linked Treasuries (iShares Lehman TIPS Bond) and its foreign equivalent (SPDR DB International Government Inflation-Protected Bond).

In search of global perspective on the asset class, your correspondent recently chatted with Ralph Segreti, the London-based global inflation-linked product manager for Barclays, in the June issue of Wealth Manager. As we learned from our conversation, the world of inflation-linked government bonds is a growth industry. For more details, read on…


Originally published at The Capital Spectator and reproduced here with the author’s permission.

2 Responses to "No Borders for Inflation-Linked Government Bonds"

  1. Guest   June 25, 2008 at 10:20 am

    Oooh global linkers indices! Finally, an inflation hedge other than commodities and overvalued TIPS and Treasuries.