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EU warned of a "stagflationary shock" as oil stays above $100 amid Strait of Hormuz disruptions.
Inflation-focused ETFs like PPI, FCPI, IVOL and INFL may help shield portfolios from rising prices.
ETFs tied to commodities, TIPS and real assets could outperform in a high-inflation, slow-growth backdrop.
The EU will cut its growth forecast and raise inflation projections due to the “stagflationary shock” triggered by the Iran war, European economy commissioner Valdis Dombrovskis told CNBC.
Speaking on the sidelines of the G7 finance ministers’ meeting in Paris, Dombrovskis said prolonged Middle East tensions and the closure of the Strait of Hormuz have kept oil prices above $100 per barrel, increasing stagflation risks.
The International Energy Agency warned that global oil inventories are shrinking at a record pace, raising concerns over future price spikes and potential supply shortages in Europe.
Notably, during stagflation, individuals’ savings accounts suffer as currency inflation cuts the value of their low-yield investments. Hence, one needs to resort to the stock market for inflation-beating gains. Against this backdrop, below we highlight a few ETF strategies that could safeguard your portfolio.
Try Out Inflation-Beating Products
Against this backdrop, we suggest a few ETFs that can be worth investing at the time of higher inflation.
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 58 bps in fees and yields 1.01% 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 15 bps in fees and yields 1.65% annually.
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 1.02%. It yields 3.84% annually.
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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Stagflation Risks Brewing? ETFs to Play
Key Takeaways
The EU will cut its growth forecast and raise inflation projections due to the “stagflationary shock” triggered by the Iran war, European economy commissioner Valdis Dombrovskis told CNBC.
Speaking on the sidelines of the G7 finance ministers’ meeting in Paris, Dombrovskis said prolonged Middle East tensions and the closure of the Strait of Hormuz have kept oil prices above $100 per barrel, increasing stagflation risks.
The International Energy Agency warned that global oil inventories are shrinking at a record pace, raising concerns over future price spikes and potential supply shortages in Europe.
Notably, during stagflation, individuals’ savings accounts suffer as currency inflation cuts the value of their low-yield investments. Hence, one needs to resort to the stock market for inflation-beating gains. Against this backdrop, below we highlight a few ETF strategies that could safeguard your portfolio.
Try Out Inflation-Beating Products
Against this backdrop, we suggest a few ETFs that can be worth investing at the time of higher inflation.
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 58 bps in fees and yields 1.01% 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 15 bps in fees and yields 1.65% annually.
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 1.02%. It yields 3.84% annually.
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.