Tag Archives: TIPS
S&P Risk Parity 2.0 Index Methodology Highlights
This blog is the second in a three-part series introducing the S&P Risk Parity 2.0 Indices. The first blog highlighted the differences between these new indices and the original ones. In this installment, we will take a closer look at the methodology of the newly launched S&P Risk Parity 2.0 Index Series. Constituent Changes Incorporating…
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Concerned about Inflation? Here’s a Tip
The newly launched S&P GSCI (U.S. 10-Year TIPS) TR was designed with inflation protection in mind. This index takes the renowned broad commodity market benchmark, the S&P GSCI, and aims to add boosted return potential from an exposure to on-the-run U.S. 10-Year Treasury Inflation-Protected Securities (TIPS). Normally, the S&P GSCI TR includes the collateral yield…
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Income-Focused Strategy Indices Show Resilience in 2020 (Part 2)
In part 1 of this blog, we saw how falling real interest rates reduce the retirement income a given account balance can support. In part 2, we focus on how interest rate risk may potentially be managed through an income-focused asset allocation. The S&P STRIDE (S&P Shift to Retirement Income and Decumulation) indices measure the…
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Income-Focused Strategy Indices Show Resilience in 2020 (Part 1)
Retirement investors faced numerous investment headwinds in 2020. In addition to heightened volatility in the stock market, they had to cope with falling interest rates on both regular and inflation-indexed bonds. Real interest rates, interest rates that have been adjusted to remove the effects of inflation, are especially relevant for retirement investors because lower real…
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U.S. Treasuries Sold Off with Rising Breakeven Inflation in January
The year 2021 started with a continuous sell-off in the U.S. Treasury bond market. Starting on the second trading day of the year, yield on the 10-year U.S. Treasury Bond rose for five consecutive trading days by 23 bps until Jan. 12, 2021, when strong auction results for the 10-year note pulled the yield back…
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Impact of Inflation Expectations on Retirement Income
Our latest S&P STRIDE dashboard showed a dramatic increase in the cost of retirement income for various retirement dates (vintages) in Q2. For example, the present value of an inflation-adjusted stream of cash flows equal to USD 1 per year – or USD 1/12 per month – starting in 2065 and ending 25 years later,…
As ETF Fund Flows Surge, Don’t Fight the Fed’s Passive Investing Philosophy
Investing legend Marty Zweig famously declared, “don’t fight the Fed.” With the Fed now buying fixed income ETFs and fund flows of index-based ETFs surging, Marty’s advice is proving timely. In this blog post, we review key index-based product performance leading up to the Fed’s intervention and detail the ETF fund flows that followed. Back…
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Tracking The Cost of Retirement Income
One of the main risks for retirees is not having enough inflation-adjusted income in retirement to support their desired standard of living. The S&P STRIDE (S&P Shift to Retirement Income and Decumulation) Indices attempt to solve this problem by focusing explicitly on reducing the volatility of income rather than reducing the volatility of returns. In…
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Setting Income Goals For A Winning Retirement
“You Keep Livin’, We’ll Keep Payin’” – lottery spokeswoman, Christy Calicchia. Most people, while they only dream of winning a lottery, understand the concept between a big lump sum payout and an annuity that says something like “either win $1 million today or win $1,000 a week for life.” Though the concept is clear, and in…
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How Much Will My Retirement Income Cost? Part 2
Understanding how much future spending, or consumption, an investor’s savings can support is critical in planning for retirement. As we discussed in part 1, the S&P STRIDE Index Series can help by providing a framework for estimating the annual income stream available in retirement using the concept of the Generalized Retirement Income Liability or “GRIL”…
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