thanks for mentioning the white paper. i think this is it?They are not intended to be an LMP.
The only problem there is that thinking of it in terms of LMP is that it implies a 5 year remaining lifespan for the individual.
They are to provide a good source of liquidity when inflation accelerates, and intermediate bonds and stocks are repricing due to increases in discount rates.
There was a Vanguard white paper about it, which I've been unable to find. I've posted about the strategy before based on Vanguard's description of it (and before the recent bout of accelerating inflation). The strategy worked as projected in 2021-2023.
Fidelity essentially copied Vanguard by incorporating short TIPS and hedged int'l bonds into their Freedom Index product suite.
https://institutional.vanguard.com/cont ... Online.pdf
cheers,
grok
Short-term Treasury Inflation-Protected
Securities (TIPS)
A downward-sloping glide path ensures that throughout their lifetime, investors will balance
stability and growth. In most cases, their wages can be seen as a recurring bond coupon, providing
stability. Hence, balance is achieved by changing the risk taken in their financial capital. Entering
the retirement phase, the typical investor’s human capital is much smaller than their financial
capital. This would make it prudent to reduce their overall equity exposure. To mitigate
exposure to short-term inflation shocks at the same time, we allocate an increasing proportion
of bonds toward short-term TIPS, which have a much higher inflation beta than U.S. bonds, as
shown in Figure 6. Inflation beta represents how reactive or variable the asset is to unexpected
inflation. A well-correlated asset with high inflation beta can be a good choice to help secure
spending from the portfolio
Statistics: Posted by grok87 — Fri Nov 29, 2024 5:14 am