The debate: are TIPS worth the headache?
Ed Al-Hussainy, a fixed-income portfolio manager at Columbia Threadneedle Investments, did not mince words in the Financial Times' Unhedged: "TIPS are for losers." He said investors often show up expecting inflation protection, but because the market is small with a thin buyer base, losses can hit harder than in standard Treasuries when things get rough. TIPS make up roughly 7% of outstanding Treasuries, which is the root of those depth concerns.
Asked whether simply holding to maturity sidesteps the problem, Al-Hussainy cautioned that "everyone thinks they're going to hold Treasuries until maturity, whether it's TIPS or nominals," but sudden cash needs happen. Brij Khurana of Wellington Management added that when volatility spikes, weaker trading conditions can widen bid ask spreads, making TIPS behave more like corporates than a classic haven.
Why some investors think the math adds up
Hakyung Kim highlighted how much real yields have climbed across the curve since June 1: 5-year at 2.68% (up 104 bps), 10-year at 2.91% (up 84 bps), 20-year at 3.17% (up 69 bps), and 30-year at 3.32% (up 61 bps). Her takeaway: if you can stick it out to maturity, those levels look enticing, especially if you expect firmer inflation.
A practical illustration from the piece: put $40,000 into a TIPS that comes due in 2036 and you would receive principal at maturity indexed for inflation so its purchasing power matches $40,000 today, plus a 2.375% annual coupon set at the most recent 10 year auction. Those coupon payments step up with official U.S. inflation until the bond matures.
Tipsladder.com summed up the opportunity: "At current yields (as of 2026-10-09) a 30 year TIPS ladder can provide a Safe Withdrawal Rate of 5.1%, and a real yield of 3.2%." Economist Laurence Kotlikoff went further in a Substack post titled "TIPS Are Screaming - Buy Me!" noting a "30 percent inflation-generated effective default on nominal federal debt" in recent years and arguing TIPS "dominate nominal Treasuries" given similar risks and expected real returns, plus what he calls near free protection against another inflation surge. His bottom line: buying and holding a TIPS ladder "appears the safest way to secure one's retirement."
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How to own TIPS, and what has worked
The author of the discussion said they generally prefer not to use TIPS mutual funds or ETFs, though they acknowledged they can be the easiest route for many investors. One exception they like is iShares' iBond target date TIPS ETFs; each fund has a set end year, making it easier to match the timing of specific bonds you plan to hold through maturity. The tradeoff: these funds distribute the inflation adjustments as current income, so to mimic an individual bond you would need to put those payouts back to work at comparable real rates.
Broad TIPS funds that continuously refresh their maturities have still done "reasonably well" versus the total U.S. bond market. The standout in this write up is Vanguard's Short Term TIPS ETF, VTIP, which sticks to maturities under five years, cutting volatility versus wider TIPS portfolios. VTIP has typically hewed closer to inflation, with less downside risk, but also less upside if real yields drop.
The contrast popped in 2022: the total U.S. bond market fell 13.1% while inflation ran at 6.5%, and VTIP limited its decline to 2.96%. The piece adds that VTIP has kept outperforming in 2026. For investors who kept the bonds to their final dates, the inflation-linked adjustments translated into gains of 7.0% for 2021, 6.5% for 2022, and 3.4% for 2026 to date.
A case study underscores the point. When it was issued, the 10 year TIPS maturing in July 2026 (CUSIP 912828S50) carried a mere 0.045% real yield to maturity. It still beat a comparable 10 year Treasury note bought in July 2016 by an average of 1.86% per year because inflation overshot expectations over the decade.
Dates to watch and the portfolio take
The next big data point lands Wednesday at 8:30 am ET: the September 2026 inflation report. It will lock in the new I Bond variable rate for November 1 and set the Social Security COLA for 2027 benefits. The author plans to post that morning, potentially with rolling updates, and invited readers to check back.
The bottom line: TIPS held to maturity come out ahead of same term nominal Treasuries if inflation beats the forecast, which currently sits near 2.35%. Nominal Treasurys are not off the table - with yields around 5%, they look compelling - but the author would lean nominal for up to five years and let TIPS shoulder the inflation protection beyond that.
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