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New ETF JCPI Hits Market to Tackle Inflation

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Red-hot inflation reading has been hitting headlines across the developed markets lately. In fact, the annual inflation rate in the United States accelerated to 8.5% in March 2022, the highest since December of 1981 from 7.9% in February and compared with market forecasts of 8.4%.

No wonder, investors will look for ways to beat inflation and stay profitable. U.S. Treasury inflation-protected securities (TIPS) ETFs used to be a great tool to fight inflation. TIPS ETFs offer robust real returns during inflationary periods, unlike their unprotected peers in the fixed-income world.

However, with the Fed looking to hike rates faster in 2022, fixed-income investing does not look like a promising bet. Fed rate hikes will likely translate into rising yields, which carry an inverse relationship with bond prices.

But at the same time, investors are looking for products that offer higher current income to beat benchmark treasury yields. As a result, it is intriguing to look for ETF ways that deploy other investing avenues in order to beat inflation. ETF issuers have also been striving to bring about new products on this concept. One such product is the newly launched JPMorgan Inflation Managed Bond ETF (JCPI - Free Report) .

Inside JCPI

This ETF is active and does not track a benchmark. The JPMorgan Inflation Managed Bond ETF seeks to protect the total return generated by its core fixed income holdings from inflation risk. It invests in a core portfolio of bonds in combination with inflation swaps. It actively manages inflation swaps and makes tactical trades to deliver returns.

The fund JCPI looks to offer positive return potential in a rising interest rate and inflationary environment. The fund’s 30-Day SEC yield as of Mar 31, 2022 is 3.27%. The ETF JCPI holds 1048 securities in its portfolio. JCPI charges 25 bps in fees.

Any Competition?

There are many products to beat inflation. Among TIPS, iShares TIPS Bond ETF (TIP - Free Report) is the most popular, with an asset base of $33 billion. Of late, several new ETFs have been launched to beat inflation. These are AXS Astoria Inflation Sensitive ETF (PPI - Free Report) , Harbor AllWeather Inflation Focus ETF (HGER - Free Report) and Amplify Inflation Fighter ETF (IWIN - Free Report) . However, all these products are designed in different ways. PPI charges 71 bps in fees, HGER charges 68 bps and IWIN charges 85 bps in fees.

The newly launched fund charges lesser than other recently debued inflation-beating products. This is a winning factor for the fund. Plus, JCPI yields handsomely, which is the need of the hour.