- Short-duration securities (bonds with less price sensitivity to interest rate changes) tend to perform better than longer-duration securities when rates are rising.
- Within the short-duration framework, corporate bonds and other credit-sensitive securities may offer attractive income and total return potential.
- Rising costs for goods and services can erode portfolios’ long-term purchase power, underscoring the need to hedge against inflation risk.
- Unlike other securities designed to combat inflation, Treasury inflation-protected securities (TIPS) offer more consistent performance potential and automatic adjustments for inflation.
- Focusing on short-duration TIPS may provide a dual advantage in today’s climate by helping protect against inflation and interest rate risk.