Inflation linked bonds
| Real return | Long term about similar government bond - 0.5% (intermediate) |
| Volatility | Government bond + 4% +- 2% |
| Correlation | Mediated thhrough inflation |
| Testfolio | TIP |
| Inflation | Real but interest rate sensitive |
Inflation linked bonds are issued by the US (TIPS, linked to CPI), several Euro countries (linked to HICP), and others. They are generally a nominal government bond plus an inflation adjusted payoff. One pays a risk premium for holding them, but it may be worth it for the protection.