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Asset Generating ETFs in Last One Year of Inflationary Pressure

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Inflation has been stubborn in the United States for the past year and has compelled the Fed to enact steep rate hikes this year. The annual inflation rate in the United States increased to 9.1% in June, marking a 41-year high. The figure was 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 jumped 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%.

Against this backdrop, below, we highlight a few ETF areas that braved the high inflationary scenario in the past year and gained assets considerably (as of Jul 22, 2022). Data are as per etf.com.

ETFs in Focus

S&P 500

Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV - Free Report) andSPDR S&P 500 ETF Trust (SPY) attracted about $99.05 billion, $55.20 billion and $16.81 billion in assets in the past year. Corrections in valuations probably led the S&P 500 to garner investors’ attention in the past year.

Total Stock Market

Vanguard Total Stock Market ETF (VTI - Free Report) stood second in asset generation, having hauled in about $36.05 billion.

Nasdaq 100

Invesco QQQ Trust (QQQ - Free Report) attracted about $21.17 billion in assets in the past year. The Nasdaq, heavy on technology and growth stocks, have been suffering from rising rate worries. Here again, investors preferred to pour assets in the beaten-down Nasdaq ETF. Plus, the index found a reason for a respite in recent months as the rise in rates slowed down a bit due to geopolitical tensions.

Value ETFs

Vanguard Value ETF (VTV - Free Report) amassed about $17.88 billion in assets. A hawkish Fed increased the benchmark U.S. treasury bond yields in the year to as high as more than 3%. This has brought back investors’ favor to the value corner of investing as value stocks fare better in a rising rate environment.

Developed Markets

Vanguard FTSE Developed Markets ETF (VEA) raked in about $13.66 billion in assets. Several developed market economies have been practicing easier monetary policies than the United States. Thus, investors have kept those markets under the investing radar.

Bond Markets

Vanguard Total Bond Market ETF (BND - Free Report) added about $12.35 billion in assets. While a decline in rates due to geopolitics helped bond investing in recent months, short-term U.S. bonds too gained more assets as faster Fed rate hike worries are looming large. Short-term bonds are carrying less interest rate-specific risks and are yielding more now.