The Big Theme 

The hidden risk in inflation-linked bonds

The hidden risk in inflation-linked bonds

Inflation-beating returns is the minimum objective for most, if not all, investors. Price rises erode the buying power of capital and income, meaning investors must find assets to provide returns that will, at the very least, keep up. But achieving inflation-beating performance can be a complicated task. A common perception is that UK inflation, as measured by the retail prices index (RPI), can be mitigated by investing in UK government inflation-linked bonds. However, this is a very common misconception.

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