Macro ·
Hedge fund manager Bob Elliott argues that TIPS currently represent a generational buying opportunity, offering inflation-protected returns of CPI plus 3% per year at present valuations.
Unlimited Funds' Bob Elliott argues TIPS (Treasury Inflation-Protected Securities) currently offer real yields of CPI +3% annually — a level he characterizes as a generational entry point. The 10-year TIPS breakeven sits near 2.3-2.4%, implying nominal yields of ~5.3% if CPI holds near 2.3%, a historically attractive risk-adjusted return for a sovereign instrument.
This matters because real yields at current levels haven't been sustained since the early 2000s. Institutional asset allocators running 60/40 portfolios are underweight TIPS relative to historical norms. The argument is structurally compelling: if inflation runs above consensus (tariff pass-through, fiscal expansion, energy), TIPS outperform nominals; if deflation hits, the floor is the nominal principal return.
The direct play is via ETFs: iShares TIPS Bond ETF (TIP), Schwab U.S. TIPS ETF (SCHP), or Vanguard Short-Term Inflation-Protected ETF (VTIP) for duration management. Duration risk is still present — a sharp growth rally could push real yields higher, marking positions to market.
Watch the May CPI print (June 11 release), Fed meeting June 17-18 for real rate guidance, and 10-year TIPS auction results for institutional demand signals.