Animal Spirits Podcast Talk Your Book: A Better Money Market Fund
Mar 24, 2025
Alex Morris, CEO of F/m Investments, joins the discussion alongside Senior Advisor Mark Spindel. They tackle the complexities of Treasury Inflation-Protected Securities (TIPS), revealing why they struggled in 2022 and the challenges of hedging against inflation. The duo introduces a new ultra-short TIPS fund aimed at individual investors, emphasizing the advantages of shorter-duration options. They also explore how ETFs can simplify access to TIPS, offering strategies to preserve purchasing power amidst economic uncertainty.
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TIPS and Interest Rates
- In 2022, longer-duration TIPS underperformed due to rising interest rates overwhelming their inflation protection.
- A new ultra-short TIPS ETF, RBIL, offers direct CPI exposure, minimizing interest rate risk.
Why TIPS Underperformed
- TIPS are Treasury bonds with a unique feature: their principal increases monthly with CPI.
- Rising real yields offset the inflation accrual, causing TIPS to underperform in 2022.
RBIL vs. T-Bills
- RBIL provides CPI appreciation plus a modest coupon, potentially outperforming T-bills.
- This makes it a better money market fund, preserving purchasing power in inflationary environments.