It’s U.S. bonds tied to U.S. inflation. If we don’t spend in the U.S., that inflation concerns us only in that it affects the prices of goods and labor used by U.S. businesses in which we invest and that it may warrant rates changes by the FED, by which TIPS are also affected.
Running a Backtest portfolio calculation from Jan 1st 2001, they seem to mostly behave like Intermediate U.S. Treasuries, with slightly better returns but with more volativity (max drawdown of -12.5% on fixed income!):
They’re stil affected by interest rate changes by the FED and, more importantly, currency exchange rates. The USD could loose strength with regards to the CHF as inflation hits (or not, if I knew how to predict currencies trends, I’d make a killing on forex trading).
All in all, they’re US linked fixed income with protection from US inflation. Fixed income, for me, is for stability and currency exchange rates are not what I’d qualify as stable. I’d still use stocks for returns (even in high inflation contexts, with hyperinflation being a different beast) and fixed income for stability in regards to my own expenses, that is, for me, in Switzerland. Local inflation is what I want to be protected against.
So if I were going for bonds, I’d use very safe Swiss government-like ones (maybe adding Cantons, some cantonal banks and maybe some municipalities, though very few). If I were to not have a use for bonds in the current interest rates environment, I’d stay clear of TIPS too.