Steve Laipply of BlackRock said investors should buy short-dated Treasury Inflation-Protected Securities if they are concerned about rising inflation [1, 2].

This recommendation comes as investors weigh the impact of shifting monetary policy on their portfolios. Because inflation erodes the purchasing power of fixed-income returns, specific hedging strategies are becoming a priority for those seeking to preserve capital.

Laipply, who serves as the BlackRock Global Co-head of iShares Fixed Income ETFs, shared these insights during a June 16 interview on CNBC Television [1, 2]. He spoke with Dom Chu about the current economic climate and the tools available to mitigate risk.

According to Laipply, the current policy regime of the Federal Reserve could lead to an environment characterized by higher inflation, increased oil prices, and rising interest rates [1, 2]. In such a scenario, short-dated TIPS are positioned as a protective investment.

Treasury Inflation-Protected Securities are government bonds where the principal value adjusts based on changes in the Consumer Price Index. By focusing on short-dated versions of these securities, investors can reduce the risk associated with long-term interest rate volatility, while still receiving protection against price increases [1, 2].

Laipply said that these assets provide a way to hedge against the specific risks posed by the new Federal Reserve policy regime [1, 2]. This approach allows investors to remain in the U.S. Treasury market while shielding their returns from the eroding effects of unexpected inflation spikes [1, 2].

“Investors worried about inflation should consider buying short-dated TIPS.”

The shift toward short-dated TIPS suggests a cautious outlook on the Federal Reserve's ability to maintain price stability. By recommending shorter durations, BlackRock is advising investors to avoid the 'duration risk' of long-term bonds—which can crash if rates rise—while still capturing the inflation-adjustment benefits of TIPS. This indicates a market expectation of persistent volatility in both energy prices and monetary policy.