Economics, Econometrics and Finance
5 years ago

Investing in Treasury Inflation-Indexed Securities Provides Portfolio Diversification Benefits

Academy of Accounting and Financial Studies journal
Nominal Treasury Securities and Treasury Inflation-Indexed Securities: An Examination of Their Yield Spread
Jose Mercado-Mendez

Paper Summary

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Treasury Inflation-Indexed Securities (TIIS) were introduced in 1997 to protect against inflation. A study compared the yields of regular Treasury securities and TIIS from 1997 to 2001. The results show that investing in TIIS can provide diversification benefits, and the yield spread between regular Treasury Notes and TIIS has been lower than the annual inflation rate. This suggests that TIIS may offer a good option for investors looking for real returns.