- Inflation-linked bonds offer an attractive alternative to cash and bonds in the event of a continued rise in inflation, while avoiding the downside risk inherent in stocks at current valuations.
- SCHP is a slightly cheaper alternative to the larger TIP which more than offsets the slightly higher spread owing to the ETF’s lower trading volume.
- The downtrend in inflation expectations in place since 2012 has given way and the bull market in inflation we identified back in April is now well underway.
- We see a number of similarities to the 1940s when the long-term Treasury rate was set at 2.5% in order to fund war spending and rising inflation saw real yields drop to -17% in 1947. A repeat of this would allow the SCHP to surge.
- The SCHP ETF also offers investors an attractive alternative to stocks amid the increasing downside risks we see resulting from the feverish retail investor activity, extreme valuations, and the historical tendency for stocks to perform poorly once inflation pressures rise significantly.
For further details see:
SCHP: A Good Alternative To Cash And Stocks