By defining “duration” as the sensitivity of an asset's price to changes in some other variable, one may characterize any asset as having an inflation duration, D_i, and a real-interest-rate duration, D_r. Unlike nominal bonds, for which D_i = D_r, inflation-linked bonds, such as Treasury Inflation-Indexed Securities (commonly called TIPS), have different values for D_i and D_r. Defined-benefit pension liabilities also have different values for D_i and D_r. Such liabilities can be modeled as bonds (or portfolios of bonds and equities or other assets) held short. Thus, by appropriately combining TIPS and nominal bonds, a manager can build a portfolio that has the same inflation duration and real-interest-rate duration as the liability stream. Equities also have different values for D_i and D_r, so the interaction of equities with TIPS and nominal bonds can be exploited in forming efficient pension portfolios—particularly in defeasing various liability streams.