Institutional investors have not warmed up to inflation-linked bonds.
According to a survey of portfolio managers at 57 top-ranking institutional fixed-income money management firms by Capital Access Corp., Murray Hill, N.J., only 5% plan to invest in the new notes, while 21% reported their firms were not planning to buy the notes.
The first of the 10-year inflation-linked bonds went on sale last week.
Most respondents said they were uncertain or had not yet considered the new bonds for investment.
Of the 5% planning to invest, most said their government portfolios would hold no more than 10% of the new security.
Some pointed out the inflation-indexed Treasury notes would have more institutional appeal if the securities were strippable. Under that condition, a number of firms indicated a willingness to invest.
Those not planning to invest said there was insufficient data about the notes and some said they were not concerned about inflation or saw better hedges against inflation.