Inflation busting investment with bonds

A number of assets do a good job of this, and a unit trust containing bonds can be a good inflation buster.

Investing in bonds to beat inflation

‍More specifically, inflation-linked bonds do the trick here. These are debt instruments issued by the government, where the principal value of the product adjusts in line with changes in the inflation rate. So, the lump sum paid back at the maturity date, as well as the periodic interest payments, will rise and fall with inflation.

The 1nvest Inflation Linked Bond Index Tracker Fund is designed to capture this exact benefit. It holds a selection of South Africa’s government bonds included in the FTSE/JSE Inflation-Linked Government Index. The fund’s goal is to fully replicate both the interest income and capital growth return of this index.

This means that buying this one fund gives you a selection of bonds with maturities that vary from just one year to dozens of years. The furthest maturity date being 2058.

Investment assets packaged to prosper

‍As with all of our unit trusts, this product is packaged to help you prosper. It has all of the usual benefits you’d expect from an index fund: a purposefully chosen selection of underlying assets, low costs, transparency, and simplicity.

The 1nvest Inflation Linked Bond Index Tracker Fund is categorised as moderately conservative because bonds are considered lower risk than equities.

How much should you invest? A minimum lump sum of R5 000.

For how long? We recommend at least one year to get value, but the best returns come over a longer term.

Speak to your financial advisor about the ways the 1nvest Inflation Linked Bond Index Tracker Fund could inject inflation-beating power into your portfolio.