Summary

As inflation protection becomes a growing priority for Canadian investors, many turned to U.S. TIPS after Real Return Bonds (RRBs) were discontinued. But this analysis from Validus shows that TIPS may not always do the job. Due to growing interest rate and structural differences between the U.S. and Canada, TIPS have significantly underperformed RRBs, highlighting the risks of using U.S. tools to manage Canadian inflation. This paper explains why Canadian investors should be cautious and presents a Canada-focused alternative.