5 ETFs to Ride High Amid Red-Hot Inflation

Persistently soaring inflation has been the hottest issue in the stock market that has made investors jittery. This is especially true as high inflationary pressure has compelled the central bank to follow a tighter monetary policy to quell inflation.

In such a scenario, investors could well be served with investments designed to counteract inflation. While there are several ways to do this, Inflation Beneficiaries ETF INFL, AXS Astoria Inflation Sensitive ETF PPI, Merk Stagflation ETF STGF, Fidelity Stocks for Inflation ETF FCPI and VanEck Inflation Allocation ETF RAAX look compelling and better options to hedge inflation (read: ETF Strategies to Navigate 40-Year High U.S. Inflation Levels).

These “inflation-protected ETFs” provide positive returns during periods when inflation is pushing down the performance of other asset classes and help to ride out volatility in a portfolio. These funds generally outperform when inflation is peaking as well as offset rising inflation.

The latest data shows that inflation roared to a level not seen in more than four decades. The consumer price index climbed 9.1% year over year in June to a fresh 40-year high, up from an 8.6% jump in May. The data raised bets that the central bank could increase rates by a historic 100 bps this month to battle the 40-year high inflation.

Fed policymakers have already signaled a second 75 bps hike in interest rates later this month amid persistent inflation. According to the latest data by CME Group, traders are pricing in a nearly 80% probability of a full percentage-point rise at the coming meeting.

Inflation Beneficiaries ETF (INFL)

Inflation Beneficiaries ETF is an actively managed ETF that seeks long-term growth of capital in real (inflation-adjusted) terms. It seeks to invest primarily in domestic and foreign companies that are expected to benefit 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.

Inflation Beneficiaries ETF holds 40 stocks in its basket with AUM of $1.2 billion. It charges 85 bps in annual fees and trades in an average daily volume of 348,000 shares.

AXS Astoria Inflation Sensitive ETF (PPI)

AXS Astoria Inflation Sensitive ETF is actively managed and seeks long-term capital appreciation in inflation-adjusted returns. AXS Astoria Inflation Sensitive ETF provides investors a one-stop inflation strategy with multi-asset exposure to equities, commodities and TIPS (read: 5 ETFs With More Than 1000% AUM Growth This Year).

AXS Astoria Inflation Sensitive ETF has accumulated $63.9 million since its debut in December 2021 while charging 71 bps in annual fees. It trades in volume of 25,000 shares per day, on average.

Merk Stagflation ETF (STGF)

Merk Stagflation ETF provides exposure to investments that are expected to benefit, either directly or indirectly, from persistent inflation, including in an environment of weak economic growth (stagflation). It tracks the Solactive Stagflation Index, and offers exposure to Treasury Inflation-Protected Securities (TIPS), gold, oil, and U.S. real estate.

Merk Stagflation ETF has newly debuted in the space in May and gathered $2.1 million in its asset base so far. It charges 45 bps in annual fees and trades in an average daily volume of 5,000 shares.

Fidelity Stocks for Inflation ETF (FCPI)

Fidelity Stocks for Inflation ETF tracks the Fidelity Stocks for Inflation Factor Index, which 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. It holds 101 stocks in its basket, with none accounting for more than 5% share.

Fidelity Stocks for Inflation ETF has amassed $242.6 million and charges 29 bps in fees per year. It trades in volume of 106,000 shares per day, on average.

VanEck Inflation Allocation ETF (RAAX)

VanEck Inflation Allocation ETF seeks to maximize real returns while seeking to reduce downside risk during sustained market declines. It primarily allocates to exchange-traded products that provide exposure to inflation-fighting real assets, including resource assets: commodities, natural resource equities; income assets: REITs, Infrastructure, MLPs; and financial assets: gold, bitcoin (read: Inflation Beneficiary ETFs in Focus as Prices Soar).

VanEck Inflation Allocation ETF holds 19 securities in its basket and charges 74 bps in annual fees. It trades in an average daily volume of 112,000 shares.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.