europeanwizard wrote: ↑
Thu Jul 30, 2020 2:05 pm
Hal wrote: ↑
Thu Jul 30, 2020 10:46 am
Just discovered there are Corporate Inflation Linked Bonds, perhaps that's what is being referred to?
Yeah, good find. That must be what he's referring to.
As for TIPS, we don't have those in the EU, as far as I know. Good graph. They're interesting.
I think he means Government Inflation Linked Bonds, not Corporate. He says to avoid nominal government bonds though.
He is in line with the recent publication of Bridgewater, the company that runs the famous All Weater fund.
https://www.bridgewater.com/grappling-w ... everywhere
As far as I understood, they are avoiding all nominal bonds of developed countries like Europe and the US now too and shift more into IL Bonds and gold. That would be a revolution, since their success was based to a large degree on longterm (nominal) government bonds. Not sure if I understood it 100% correctly since English is not my native language.
And there are indeed TIPS/ IL Bonds for the EU. For example: iShares € Inflation Linked Govt Bond UCITS ETF
The advantage for IL Bonds is that they have unlimited potential for price increases, since inflation/real yield has no upper limit. For nominal bonds though Bridgewater estimates that interest rates of about -1% would be the end, at that point cash would probably be much more attractive than nominal bonds. Their upside potential is limited, with huge downside potential if rates go up again.