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3 ETFs Braving Inflationary Fears in Past Three Months

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Annual inflation rate in the United States increased to 9.1% in June from a 41-year high of 8.8% in May, per tradingeconomics, but above market forecasts of 8.8%. Energy prices jumped 41.6% due to a rise in gasoline prices (59.9%, the largest increase since March 1980), fuel oil (98.5%), electricity (13.7%, the largest increase since April 2006), and natural gas (38.4%, the largest increase since October 2005).

Food costs surged 10.4%, the most since February 1981, with food at home jumping 12.2%, the most since April 1979. Prices also surged massively for shelter (5.6%), household furnishings and operations (9.5%), newvehicles (11.4%), used cars and trucks (1.7%), and airline fares (34.1%). Core CPI, which excludes food and energy, rose 5.9%, slightly below 6% in May, but above forecasts of 5.7%.

Inflation has been stubborn in the United States since the start of this year and compelled the Fed to enact 150 bps rate hikes so far. The Fed is likely to enact fatter and faster hikes in the coming days to contain inflation. Wall Street is in dire straits in such a condition (read: 5 Sector ETFs to Win from a 9% U.S. Inflation).

But BlackRock CEO Larry Fink told CNBC’s Jim Cramer on Jul 20 that “we’re going to get through this’ and we should panic about inflation. When Cramer asked whether persistent inflation, the Fed’s rate increases and the Russia-Ukraine war is a threat to the overall health of the U.S. economy, Fink said that the headwinds are “business as usual” for long-term investors.

Against this backdrop, below we highlight a few ETFs that braved inflation in the past three months and gained moderately against a 11.2% in the S&P 500 (as of Jul 21, 2022).

ETFs in Focus

Invesco Solar ETF (TAN - Free Report) – Up 5.04%

The underlying MAC Global Solar Energy Index comprises companies in the solar energy industry. The fund charges 66 bps in fees.

iPath Bloomberg Softs Subindex Total Return ETN (JJSSF - Free Report) – Up 4.31%

The underlying Bloomberg Softs Subindex Total Return reflects the returns that are potentially available through an unleveraged investment in the futures contracts on softs commodities. The fund charges 75 bps in fees.

Virtus LifeSci Biotech Clinical Trials ETF (BBC - Free Report) – Up 2.9%

The underlying LifeSci Biotechnology Clinical Trials Index is an equal-weighted index that is designed to measure the equity market performance of the common stock of U.S. exchange-listed biotechnology companies with a primary product offering that is in a Phase 1, Phase 2 or Phase 3 clinical trial stage of development. The fund charges 79 bps in fees.


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