CliffEdge wrote:mc2fool wrote:CliffEdge wrote:Hariseldon58 wrote:CliffEdge wrote:I have some TP05 for the same reasons. Is that the same as TIP5.L?
Yes TIP5 and TP05 are effectively the same thing, both are US$ holdings, one is priced in £ ( that is priced and NOT hedged ) the other in US $ the underlying exposure is the same, different platforms allow you to trade one or the other.
There are a few more like that with the iShares range that I know of. Some platforms trade both, some trade one or the other.
iShares UK site lists the TIP5 variant but it might be simpler to buy TP05 if the option is there.
Thanks for clarifying that, I found the iShares website totally confusing about their TIPS funds. I know TP05 is not hedged. It seemed like a simple way to buy dollars with maybe also some inflation protection. The closest thing I could find to cash but not in pounds. I think I've made my fears about a run on the pound etc. clear elsewhere, so that's why I was looking to hold dollars. I'll probably add a bit more to TP05. In a way if it doesn't do well that'll be a good thing as that means I'll be wrong about the UK's post Brexit performance. I sincerely hope I have to come back and apologize to the Brexiteers but that's not the way I'm betting.
Are you sure that TP05/TIP5, indeed, any index linkers, are on positive real redemption yields?
It wasn't so long ago that both US and UK index linkers were on negative real redemption yields, and had been for several years, meaning that investors were locking in a real loss to maturity.
See https://moneyweek.com/investments/bonds/government-bonds/604162/index-linked-bonds-could-prove-a-costly-inflation-hedge.
I'm unclear on the situation now but I see TP05/TIP5 currently has a real yield of -1.01%, I take that to be running yield, and a Weighted Avg YTM (redemption yield) of 2.24% but I don't believe that's a real yield, so if inflation is more than that then you're losing money in real terms, no?
https://www.ishares.com/uk/individual/en/products/287202/ishares-tips-0-5-ucits-etf
Maybe this is better in a thread of its own elsewhere ...
My main objective is to protect against a catastrophic collapse in the pound which I think is a real possibility, hard to see why not. A slight loss in value of 1 or 2% per year with TP05 I can accept. My cash pounds are currently losing 10 or 11% a year anyway.
But TBH my understanding of the finer points is minimal, though I know it's a kind of fund with TIPS of short average duration which I thought was a good thing.
Also it seems likely that US inflation will be short-lived as it's a massive country and economy with huge capability and resources whereas post Brexit the UK is an economic basket case with very little assets, huge debt, and descending rapidly into sub third world status.
Fair enuff. A collapse in the pound doesn't overly concern me as the majority of my investments are in global equities (and in fact even the FTSE 100 goes up when the £ goes down), and most of my guaranteed income is from non-UK pensions.
Still, would be interested if anyone else has looked into if negative-real-redemption-yields of index linkers are still so....