Inflation-Indexed Security
Definition of 'Inflation-Indexed Security'A security that guarantees a return higher than the rate of inflation if it is held to maturity. Inflation-indexed securities link their capital appreciation, or coupon payments, to inflation rates. Investors seeking safe returns with little to no risk will often hold inflation-indexed securities.Also known as a "real return" securities. |
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Investopedia explains 'Inflation-Indexed Security'In other words, an inflation-indexed security guarantees a real return. These real return securities usually come in the form of a bond or note, but may also come in other forms. Since these types of securities offer investors a very high level of safety, the coupons attached to such securities are typically lower than notes with a higher level of risk. There is always a risk-reward tradeoff for investors to balance. |
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