A security with a guarantee of a return rate that is higher than the rate of inflation if it is held to maturity. Inflation-indexed securities link their capital appreciation, or coupon, to inflation rates. Investors who are seeking safe returns with little risk often hold inflation-indexed securities.
An inflation-indexed security guarantees a real return. Real return securities are usually bonds or notes, but may also come in other forms. Since these types of securities offer investors a very high level of safety, the coupons attached to such securities are typically lower than notes with a higher level of risk.