TIPS' Time May Be Near

Investors who are worried about inflation should count on their TIPS, but new buyers of Treasury inflation protected securities shouldn't bet on the outsize returns of the past several years, and should avoid the temptation to use them as an interest rate hedge.

After a lengthy stretch of interest rate cuts, the latest consumer price index figures are starting to raise concerns about rising inflation, which will likely be accompanied by higher interest rates. Mindful of this possibility, investment advisers say they are putting more clients into funds that are based on TIPS, principal-adjusted securities whose value changes as the main consumer price index gauge shifts.

"That's the next bus coming down," says Jason Yaeger, a financial planner in Medford, Ore., who says he has adopted TIPS funds as his principal inflationary hedge. "If they aren't on it, a lot of people are going to get hurt." ...