The CBOE Validus S&P500 Dynamic PutWrite ETF
11 August 2025Validus Real Yield Protection Strategy (RYPS)
11 August 2025Summary
After Canada stopped issuing Real Return Bonds (RRBs) in 2022, investors have been searching for reliable ways to protect their portfolios from inflation. RRBs have long been the most accurate hedge, but their limited availability and low yields have pushed many toward alternatives like infrastructure, real estate, and commodities. Research shows commodities are the most effective and liquid option, while real estate offers mixed results and infrastructure’s inflation protection is often delayed. To address this gap, Validus Risk Management created the RRB Replication Strategy, combining nominal bonds with a custom commodity basket tied to Canada’s CPI. This solution delivers strong inflation protection, high correlation to the RRB benchmark, and better performance than traditional hedges, all while remaining liquid and scalable.
Key Insights
-
Canada’s decision to stop issuing Real Return Bonds (RRBs) in 2022 has left investors looking for new ways to protect against inflation.
-
RRBs have been the most precise inflation hedge, but their limited availability and low yields make them less practical today.
-
The Validus RRB Replication Strategy combines nominal bonds with a commodity basket linked to Canada’s Consumer Price Index (CPI), delivering strong inflation protection, better performance than U.S. TIPS, and high correlation to the RRB benchmark.
- This strategy is liquid, scalable, and effective even if RRBs were still available