Anti-Inflation ETFs: How to Invest
Investors looking to lessen the impact of rising inflation on their portfolios may find new opportunities in certain exchange-traded funds.
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The recently launched Amplify Inflation Fighter ETF offers investors access to a combination of stocks and commodities looking to benefit directly or indirectly from inflation. The fund‘s portfolio manager, Mike Venuto, told FOX Business that he focuses on real estate as a store of value.
“There are many real estate ETFs, but all of them are populated by [real estate investment trusts]“, he explained. “REITs are not a great store of value because they are structured from a tax perspective to return income to investors. And to that end, they tend to move with interest rates and really don’t do very well in an inflationary environment. They tend to lose money in inflationary environments.”
|I WIN||AMPLIFY ETF TR AMPLIFY INFLATION FIGHTER E||26.15||+0.21||+0.83%|
The Amplify Inflation Fighter ETF focuses on six constituents: land development companies, commodity REITs, home building companies, real estate technology companies, consumer real estate names and real commodities , including corn, copper, bitcoin and gold. The fund may invest up to 50% of its net assets in commodity futures, while the rest of the portfolio will be invested in stocks and other securities.
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Since its launch on February 2, the Amplify Inflation Fighter ETF is up about 5% year-to-date. Venuto noted that corn and gold prices were the biggest contributors to the ETF’s overall returns, while the biggest detractor was real estate technology companies, which hold the smallest weighting in the fund. .
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|GLD||SPDR GOLD SHARES TRUST – EUR ACC||191.89||+5.50||+2.95%|
Last week, the Goldman Sachs Commodity Index jumped nearly 20%, the biggest weekly gain on record.
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In January, the Consumer Price Index jumped 7.5%, the fastest increase since February 1982. On Thursday, the Department of Labor will release February’s Consumer Price Index, which is expected to continue its upward trend as Russia’s invasion of Ukraine pushed up commodity prices.
While Venuto expects inflation to remain at a high and sustained level, he believes this week’s CPI will not fully reflect the impact of the Russian-Ukrainian conflict.
“I think the CPI will be a little more muted this week, but I think the next one is going to scare people off because all that transitory argument is gone now,” he said.
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When it comes to investing in an inflationary environment, Venuto stressed that investors need to “throw away their playbook” and start seeing things differently.
“There are a lot of things that work differently in an environment where the Fed is not dovish,” he added. “Most people have lived in a dovish Fed their entire investing career.”
In addition to the Amplify Inflation Fighter ETF, Venuto says the Teucrium Agricultural Fund, WisdomTree’s Enhanced Commodity Strategy Fund, the Simplify Interest Rate Hedge ETF and the FolioBeyond Rising Rates ETF are all good investments to fight inflation. ‘inflation.
|KEY WORDS||TEUCRIUM COMMODITY TRUST FD AGRICOLE||34.23||-0.29||-0.83%|
|GCC||WISDOMTREE TRUST IMPROVED COMMODITY STRATEGY||27.38||+1.27||+4.86%|
|PFIX||SIMPLIFY EXCHANGE TRADED FDS SIMPLIFY INT RATE HEDGE ETF||45.05||+0.35||+0.78%|
|RISR||TIDAL ETF TRUST FOLIOBEYOND RISE IN RATES AND||29.07||+0.06||+0.21%|
Venuto expects the Federal Reserve to raise rates at least twice this year, but argued that progress in tackling inflation is unlikely to come until after the midterm elections.
“I don’t see any chance that inflation will be tackled significantly before the fourth quarter of this year,” he said. “And then it’s always being optimistic.”
FOX Business’ Megan Henney contributed to this report