With deflation less likely and inflation still several quarters away, now may be the time to start accumulating inflation protected treasury securities or TIPS.
According to WSJ reporter Min Zeng, the TIPS market is setting up for a short-term correction with the inflation outlook remaining subdued in coming months. According to Zeng, mega money manager Pimco has been reducing its short term position in TIPS, but will be looking to add again when the market pulls back.
ETF investors can gain access to TIPS through both domestic and international funds. The iShares Barclays TIPS Bond Fund (TIP) tracks an index that includes all publicly traded US Treasury TIPS that have at least 1 year remaining to maturity and are rated investment grade.
The SPDR DB International Government Inflation-Protected Bond ETF (WIP) tracks an index of non-U.S. inflation-linked government bonds. Top holdings include bonds from Sweden, Japan, France and Turkey.