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What are index-linked bonds?

Index-linked bonds—also called Treasury Inflation-Protected Securities in the U.S.—pay interest that is linked to an underlying index, such as the Consumer Price Index (CPI). Index-linked bonds are issued by governments to help mitigate the impact of inflation, paying a real yield plus accrued inflation.

What is the S&P 500 bond index?

The S&P 500® Bond Index is designed to be a corporate-bond counterpart to the S&P 500, which is widely regarded as the best single gauge of large-cap U.S. equities. Market value-weighted, the index seeks to measure the performance of U.S. corporate debt issued by constituents in the iconic S&P 500.

Are bonds indexed to inflation?

Bonds that are linked to inflation are usually offered by federal governments. These fixed-income investments offer investors protection against inflation because they are indexed to inflation. As such, the principal and interest rises and falls with the inflation rate.

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