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Inflation Believers Playing Long Game Are Winning as They Wait

  • U.S. TIPS beating nominal peers even as inflation stays tame
  • Vanguard sees upside on vaccine; BlackRock likes 30-year TIPS
Updated on

Investors shuffling trades amid a sputtering reflation narrative may have overlooked a little fact: Bond managers who’ve been bullish on inflation prospects this year have been winning.

Inflation-linked U.S. Treasuries -- known as TIPS -- are on pace to outperform their regular counterparts for the second straight year, and some of the world’s biggest investors see scope for further gains. Vanguard Group Inc., which reaped profits on inflation-protected bonds it bought in March when the outlook was at its most dire, is looking for a re-entry point. And both BlackRock Inc. and Ardea Investment Management are wagering that the market is underestimating gains in consumer prices over the next few decades.