There are two main problems with TIPS as a good inflation hedge in my opinion. First is the utilization of the CPI-U. I am not convinced it is anywhere close to the accurate figure for real inflation thus the crediting to the TIPS' principal is limited.
The larger problem of buying TIPS in the current interest rate environment is the uber long duration of these bonds. The duration (duration is not the same as maturity) of these bonds is so long due to the low to virtually no interest they are paying. If and when interest rates really kick up, then these bonds will be slaughtered in price.
The CPI adjustments won't be enough to compensate. You will have to hold them to maturity and I bet you won't feel they were such a good deal when all is said and done.
