BOSTON (AP) - One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices best known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, to $57 billion at the end of August, according to Morningstar Inc.

It's part of a broader shift by many investors who've been scared away by stocks, despite the market's hefty rebound from its March low. They've been piling into the greater safety of bonds, and TIPS - while not without risk - are about as safe as you can get.

The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren't necessarily the best short-term investment. But historically low interest rates and the federal government's growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

That may not play out for another couple years or more. But if you're investing for the long run, the premium you pay now for protection could prove to be much cheaper than when inflation returns, and prices for TIPS rise.

Here are some common questions and answers about TIPS:

Q: How do TIPS work?

A: Introduced by the government in 1997, TIPS are a type of Treasury bond - investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index, an inflation yardstick tied to prices for goods and services. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you're paid the adjusted principal, or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in so-called "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn't seem so good, until you consider what havoc inflation might wreak. The difference - or "break-even rate" - between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries' current 3.32 percent yield, TIPS investors will end up glad they paid a premium for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

Q: How have TIPS' market values held up lately?

A: Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS funds in the middle of the performance pack among fixed-income fund categories. That includes corporate bond funds that generally offer better but more volatile returns, because of the higher risk of default from investing in companies rather than the government. For example, the top-yielding fund category year-to-date, high-yield bonds, is up nearly 39 percent year-to-date. But go back five years, and TIPS funds performed better, with an average 4.2 percent annual return to 4.09 percent for high-yield bond funds.

And TIPS have fared better than other government bond categories lately. Intermediate-duration bond funds have returned 4.21 percent year-to-date, with 2.87 percent for short-duration bonds and a 9.66 percent loss for long-duration bonds.

"If you compare TIPS to the other government categories, they've really outperformed," says Lawrence Jones, a Morningstar fund analyst specializing in fixed income

"A lot of investors think federal policy will spur higher inflation down the road," Jones says. "I don't talk to too many fund managers who are alarmist about this - they're not talking about hyperinflation like some emerging market country might have. But they are talking about higher-than-average inflation."

Q: What are my options for buying TIPS?

A: You can buy TIPS directly from the U.S. Treasury at http://www.treasurydirect.gov and avoid brokerage fees.

If you're not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities, but can be traded like a stock.

Morningstar's current two favorite TIPS funds: Harbor Real Return (HARRX) and Vanguard Inflation-Protected Securities (VIPSX).

If you buy TIPS directly from the government, Jones recommends considering a "ladder" approach - owning bonds of varying durations that mature at staggered intervals to help manage risk and ensure steady cash flow. When one TIPS reaches maturity, it's replaced by another one as you approach retirement.

Q: TIPS appear to carry little risk. Is that the case?

A: Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Federal Reserve boosts interest rates faster than inflation grows, or before inflation sets in, TIPS' values will erode.

They can also be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients' orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they've bounced back.

"Because people have this perception of TIPS being riskless, when they see a little volatility, they tend to get spooked, and sell out of them at precisely the wrong time," Jones says. he said. "Investors need to understand to just sit tight, and not get spooked because of the volatility."

Have questions of your own? Send them to yourmoney@ap.org