This New 30-Year TIPS Might Not Be A Great Investment

Summary

  • A real yield around 0.91% won’t be enough justify an investment in a highly-volatile issue, even for most buy-and-traders.
  • If you’re older than 60, the 30-year term isn’t appealing as a buy-and-hold investment.
  • This TIPS is likely to be cash-flow negative in a taxable account.

The U.S. Treasury announced Thursday that it will auction $7 billion in a new 30-year Treasury Inflation Protected Security (CUSIP 912810RW0) on Thursday, February 16. I haven’t been a fan of the 30-year TIPS maturity for several years, especially when after-inflation yields are well below the 2% benchmark typical in such a long-term investment.

Read my full analysis on SeekingAlpha.com

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One Response to This New 30-Year TIPS Might Not Be A Great Investment

  1. joe says:

    I’m participating in this auction. But it will be in a tax free account. I would also not own this outside a tax free account because of what you say. I miss the days of real yields over 2%. When the real yield fell in the .5% for 30 years I sold them and made a huge profit. If real yileds jump over 2% I’ll buy in non tax free accounts. But haven’t seen that for 7 years now.

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