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The annual inflation rate in the United States accelerated for a second straight month to 3.7% in August from 3.2% in July, above market forecasts of 3.6%. Oil prices have been on the rise in the previous two months, which has been held responsible for the high price inflation. Core inflation rate however, which excludes food and energy, slowed for the fifth month to 4.3%, in line with market expectations.
In August 2023, energy cost fell 3.6% year over year, much less than a 12.5% drop in July, with prices declining at a smaller pace for fuel oil (-14.8% vs -26.5%) and gasoline (-3.3% vs -19.9%). Also, cost of transportation services (10.3% vs 9%) increased more.
With oil prices hovering around a 10-month high level, we expect future upward pressure on inflation. Against this backdrop, we suggest a few ETFs that can be worth investing at the time of higher inflation.
IWIN is an actively-managed ETF, investing in asset classes that look to benefit, either directly or indirectly, from inflation. IWIN intends to provide investors with long-term capital appreciation in inflation-adjusted terms.
The portfolio includes an active mix of asset miners (28%), homebuilders (18.40%), commodities (17.50%), land development (17.10%), homebuilders (15.97%), commodity REITs (12.30%) and real estate technology (6.70%). The expense ratio of IWIN is 0.92%.
AXS Astoria Inflation Sensitive ETF is an actively managed, broadly diversified ETF that seeks long-term capital appreciation in inflation-adjusted returns. Renowned ETF experts at Astoria Portfolio Advisors manage PPI by investing where the opportunities are: cyclical stocks (such as natural resources, energy, industrials and materials), commodities and TIPS. The fund charges 76 bps in fees and yields 3.24% annually.
The underlying Fidelity Stocks for Inflation Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with attractive valuations, high quality profiles and positive momentum signals, emphasizing industries that tend to outperform in inflationary environments. The fund charges 29 bps in fees.
The Quadratic Interest Rate Volatility and Inflation Hedge ETF is actively managed and seeks to achieve its investment objective primarily by investing, directly or indirectly, in a mix of U.S. Treasury Inflation-Protected Securities and long options tied to the shape of the U.S. interest rate curve. The expense ratio of the fund is 1.03%.
The VanEck Inflation Allocation ETF seeks long-term total return. It also maximizes real returns while seeking to reduce downside risk during sustained market declines by allocating primarily to exchange-traded products that provides exposure to real assets, which include commodities, real estate, natural resources, and infrastructure. The fund charges 87 bps in fees.
The actively managed ETF seeks long-term growth of capital in real (inflation-adjusted) terms. It seeks to achieve its investment objective by investing primarily in domestic and foreign equity securities of companies that are expected to benefit, either directly or indirectly, from rising prices of real assets (i.e., assets whose value is mainly derived from physical properties such as commodities) such as those whose revenues are expected to increase with inflation without corresponding increases in expenses. It charges 85 bps in fees.
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6 ETFs to Play Persistent Inflation
The annual inflation rate in the United States accelerated for a second straight month to 3.7% in August from 3.2% in July, above market forecasts of 3.6%. Oil prices have been on the rise in the previous two months, which has been held responsible for the high price inflation. Core inflation rate however, which excludes food and energy, slowed for the fifth month to 4.3%, in line with market expectations.
In August 2023, energy cost fell 3.6% year over year, much less than a 12.5% drop in July, with prices declining at a smaller pace for fuel oil (-14.8% vs -26.5%) and gasoline (-3.3% vs -19.9%). Also, cost of transportation services (10.3% vs 9%) increased more.
With oil prices hovering around a 10-month high level, we expect future upward pressure on inflation. Against this backdrop, we suggest a few ETFs that can be worth investing at the time of higher inflation.
ETFs in Focus
Amplify Inflation Fighter ETF (IWIN - Free Report)
IWIN is an actively-managed ETF, investing in asset classes that look to benefit, either directly or indirectly, from inflation. IWIN intends to provide investors with long-term capital appreciation in inflation-adjusted terms.
The portfolio includes an active mix of asset miners (28%), homebuilders (18.40%), commodities (17.50%), land development (17.10%), homebuilders (15.97%), commodity REITs (12.30%) and real estate technology (6.70%). The expense ratio of IWIN is 0.92%.
AXS Astoria Inflation Sensitive ETF (PPI - Free Report)
AXS Astoria Inflation Sensitive ETF is an actively managed, broadly diversified ETF that seeks long-term capital appreciation in inflation-adjusted returns. Renowned ETF experts at Astoria Portfolio Advisors manage PPI by investing where the opportunities are: cyclical stocks (such as natural resources, energy, industrials and materials), commodities and TIPS. The fund charges 76 bps in fees and yields 3.24% annually.
Fidelity Stocks For Inflation ETF (FCPI - Free Report)
The underlying Fidelity Stocks for Inflation Factor Index reflects the performance of stocks of large and mid-capitalization U.S. companies with attractive valuations, high quality profiles and positive momentum signals, emphasizing industries that tend to outperform in inflationary environments. The fund charges 29 bps in fees.
Quadratic Interest Rate Volatility And Inflation Hedge ETF (IVOL - Free Report)
The Quadratic Interest Rate Volatility and Inflation Hedge ETF is actively managed and seeks to achieve its investment objective primarily by investing, directly or indirectly, in a mix of U.S. Treasury Inflation-Protected Securities and long options tied to the shape of the U.S. interest rate curve. The expense ratio of the fund is 1.03%.
VanEck Inflation Allocation ETF (RAAX - Free Report)
The VanEck Inflation Allocation ETF seeks long-term total return. It also maximizes real returns while seeking to reduce downside risk during sustained market declines by allocating primarily to exchange-traded products that provides exposure to real assets, which include commodities, real estate, natural resources, and infrastructure. The fund charges 87 bps in fees.
Horizon Kinetics Inflation Beneficiaries ETF (INFL - Free Report)
The actively managed ETF seeks long-term growth of capital in real (inflation-adjusted) terms. It seeks to achieve its investment objective by investing primarily in domestic and foreign equity securities of companies that are expected to benefit, either directly or indirectly, from rising prices of real assets (i.e., assets whose value is mainly derived from physical properties such as commodities) such as those whose revenues are expected to increase with inflation without corresponding increases in expenses. It charges 85 bps in fees.