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If the inflation index increased by 10%, the principal of the bond would increase to 110 units. The coupon rate would remain at 5%, resulting in an interest payment of 110 x 5% = 5.5 units. For other bonds, such as the Series I United States Savings Bonds , the interest rate is adjusted according to inflation.
Rising inflation can tamp down any returns realized from floating rate corporate bonds, but investors are keen to look at the IQ Real Return ETF (CPI) as an option to hedge against inflation.
The iShares 0-5 Year TIPS Bond ETF tracks short-term U.S. TIPS, which are government bonds whose face value rises with inflation. STIP has a 3.76% 30-day SEC yield and a 2.53 year duration.
The iShares Core U.S. Aggregate Bond ETF is one of the most popular bond ETFs in the world. The fund tracks the entire U.S. investment-grade bond market and has over 11,000 holdings.
iShares 20+ Year Treasury Bond ETF (TLT) This fund owns exclusively long-dated U.S. Treasury bonds , with maturities of 20 to 30 years, so this fund will be quite responsive to changing rates.
The iBoxx bond market indices are transparent, rules-based fixed income indices that are primarily used by passive and active professional investors as well as investment banks. iBoxx offers broad benchmarks used to evaluate investment performance and to conduct research, as well as liquid indices used as an underlying for tradable products ...
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