The Problems of Using Tips as an Allocation in a Standard Portfolio

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In a year like last year, when you would have expected them to do something in the face of inflation, they performed pretty much like nominal bonds. And it would be a mistake to think that because these have tips in them that they're going to be better inflation fighters than other risk parity style portfolios. They'd probably be better off of some exposure to a managed futures fund like DBMF or something similar.

In this episode we answer emails from Drew, Carlos and Eric. We discuss the UPAR and RPAR risk parity ETFs and their construction, rant a bit about TIPS, discuss attractive narratives about de-dollarization in the context of cognitive biases (the possibility effect and ignoring base rates) and how our adult children use a Golden Ratio-style portfolio to save for intermediate goals.

Links:

Father McKenna Center donation page: Donate - Father McKenna Center

UPAR webpage: UPAR Risk Parity ETF (rparetf.com)

Michael Kitces interview: Michael Kitces: How Higher Yields Affect Asset Allocation and Retirement Planning | The Long View (simplecast.com)

De-dollarization article: De-dollarization Has Begun. | AIER

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