Real return bonds are a type of fixed-income security that is designed to protect investors from inflation. The principal value of a real return bond is adjusted each year based on the rate of inflation, as measured by the Consumer Price Index (CPI). This means that investors who hold real return bonds can be sure that the value of their investment will keep pace with inflation, even if interest rates rise.
Real return bonds are an attractive investment for investors who are concerned about the potential for inflation. They can also be a good way to diversify a portfolio, as they are not correlated to other types of investments, such as stocks and bonds. Historically, real return bonds have performed well during periods of high inflation. For example, during the 1970s, when inflation was high, real return bonds outperformed other types of investments.