Pick your inflation hedge: ETFs investors are buying for protection

by | Mar 10, 2023 | Inflation Hedge | 6 comments

Pick your inflation hedge: ETFs investors are buying for protection




James Davolos, vice president and portfolio manager at Horizon Kinetics, Anna Paglia, head of ETFs and indexed strategies at Invesco, and Dave Nadig, chief investment officer and director of research at ETF Trends, break down how investors are hedging against inflation. With CNBC’s Bob Pisani. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

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Inflation is a major concern for investors right now, as prices for goods and services continue to rise at an alarming rate. As a result, investors are turning to Exchange-Traded Funds (ETFs) that can offer protection against inflation. Here are some of the most popular ETFs that investors are buying as inflation hedges:

1. iShares TIPS Bond ETF (TIP) – This ETF invests in US Treasury Inflation-Protected Securities (TIPS), which are designed to keep pace with inflation by adjusting the principal value of the bond. The TIP ETF offers a low-risk way to hedge against inflation, and investors are attracted to its liquidity and diversification benefits.

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2. SPDR Gold Shares (GLD) – Gold is a traditional hedge against inflation, and as the price of gold rises, so too does the value of the GLD ETF. Many investors view gold as the ultimate inflation hedge, and the GLD ETF is a convenient way to invest in the commodity without taking physical possession of it.

3. iShares Silver Trust (SLV) – Silver is another precious metal that many investors consider to be a hedge against inflation. The SLV ETF invests in physical silver and offers exposure to the price movements of the metal. While silver may not have the same level of investor appeal as gold, it can still be an effective inflation hedge.

4. Invesco DB Agriculture Fund (DBA) – As food prices rise, the Invesco DB Agriculture Fund provides exposure to the futures contracts of agricultural commodities such as soybeans, corn, and wheat. The DBA ETF can offer investors protection against rising food prices, which can be a major contributor to inflation.

5. PIMCO Commodity Real Return Strategy ETF (PCRDX) – This ETF invests in a diversified mix of commodities, including energy, metals, and agriculture. The PCRDX ETF is actively managed, which means that the portfolio is adjusted based on market conditions. The fund seeks to provide protection against inflation while also offering the potential for capital appreciation.

Investors should keep in mind that while these ETFs offer protection against inflation, they may not be suitable for all investment portfolios. As with any investment, it is important to do your research and evaluate your risk tolerance before investing. Consulting with a financial advisor can also help ensure that your portfolio is properly diversified and aligned with your long-term financial goals.

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6 Comments

  1. Muas Hawj.

    TERRIBLE ENGLISH

  2. Grand Infinite

    Inflation has come bcz banks leaked info to businesses informing that the typical average household has managed to save $$$. So? Big business wants that $$$. Inflation!

  3. Robert Platt

    If enough people pile into inflation hedges, that can slow inflation. When you buy an option that protects you against inflation, you are sending a market signal and acting as a counterweight. And the rate moves a tiny bit in response to the purchase.

    So when people whine about one or another fiscal decision by the government, they should be asked, are they buying an option in response? If market members are incentivized to restore the balance, are things REALLY as bad as people say?

    Of course, the Fed is buying bonds and it is expensive to bet against that, but they are doing that because of their full-employment mandate. If you don't like that, get the mandate reversed. When the party that wanted that reversed had FULL control, of the legislature and the executive, THEY DID NOT DO IT.

  4. J.J P

    For God so loved the world that he gave his one and only Son,

    that whoever believes in him shall not perish but have eternal life. / John 3:16

  5. Pauline Scholes

    Sincerely speaking investment in crypto and stock trading in easier when you have the strategies and knowledge, I tried trading but lost totally.i advise you place your trade with an expert who knows how to trade

  6. Ricardo Hernandez

    Well, we've been knowing about this inflation concern for a long while. Why is it now a problem with the market?

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