TIP Barbell?

[Clive]

...

[WildAboutHarry]

I suspect I know how most on this board would respond to using TIPs in a PP

If I was retired and could get a decent real yield on LT TIPS (both hypothetical) I would consider being 50% or more in TIPS with the balance in the PP.  Retirement is definitely a finite period, so the chances for a bad outcome with TiPS (changes to CPI, etc.) would be reduced somewhat over holding TIPS for an investing lifetime.

I really see no problem holding ST TIPS as part of the cash holding in a PP.  After all, I-Bonds are just retail versions of LT TIPS with a put option and more favorable tax treatment.

LT TIPS don't have the same deflation punch that LTTs do, although they do provide some deflation protection.  So they obviously are not the functional equivalent of LTTs.

Of course this applies to US IP bonds.  Not sure how UK and other IP bonds work.

[stone]

WildAboutHarry, I agree about not being sure how long term TIPs fit alongside a PP but they are a very volatile and yet "risk free" asset class. As such it doesn't seem stupid to me to hold them and rebalance in and out of them as is done between PP assets in the PP.
I think in the UK, TR8F is the longest dated TIP and is a 40 year bond. I guess it is the longest duration gilt available with a duration longer that the 50year conventional or the undated gilts. I might be in a muddle about that though.

[stone]

Clive, that new 50year UK TIP is an intriguing entity. I don't think conventional LTT and index linked ultra-long treasuries counter each other out. They both rise and fall as interest rates rise and fall and as "risk on" assets become appealing or scary. It isn't clear to me either how an ultra-long index linked treasury would compare to a blend of gold and LTT. The ultra-long index linked gilts don't have the same global connection  as gold. If our currency slips, they don't give the immediate protection that gold does.

[Maestro G]

I wasn't thinking of a gold replacement Stone, more along the lines (see http://gyroscopicinvesting.com/forum/ht ... 9#msg30899) of something perhaps like :

12.5% TSM, 12.5% SCV
12.5% long dated gilts, 12.5% long dated index linked gilts
12.5% short dated gilts, 12.5% index linked savings certificates
25% gold

might be more resilient/stable overall. Generally we'd want conventional and long dated to be similar, but have the added averaging out over positive/negative real rate (yield) periods.

Hi Clive,

That is essentially what I decided to do with more stock exposure:

25% - VTI
25% - VXUS
10% - IAU
10% - TLT
10% - LTPZ/STPZ (split 50/50)
20% - TUZ (Actually there are other "cash" savings here: I-Bonds, Alliant CU etc, etc... but I do own TUZ and use it as the total proxy for portfolio monitoring).

Not the traditional PP of course, but I have decided I am comfortable with the overall 50/50 equity/"protection" split with it's increased risk and periodic re-balancing.

Cheers!
Maestro G