Emerging market inflation-linked bonds

Investigating the value added by inflation-linked bonds in investment portfolios in emerging markets, the author found that the inclusion of inflation-linked bonds improved the risk-return characteristics of investment portfolios in many of the emerging markets. He also found that inflation-linked bond returns correlate more positively with realized inflation than do nominal bonds, even in the short run. Thus, investors should consider adding emerging market inflation-linked bonds to their investment portfolios.

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