2 ETFs For Inflation-Wary Investors

 | Jun 21, 2021 05:19

US equity markets slid last week, following the Fed’s modestly-hawkish stance in response to surging inflation levels. The central bank aims to “achieve maximum employment and inflation at the rate of 2% over the longer run.” Although policy makers kept interest rates at the current record-low levels, the announcement signalled two possible rate hikes in 2023.

Higher rates can lead to lower disposable income for consumers, along with potentially higher borrowing costs for companies. These scenarios would typically mean different outcomes for stocks in different sectors.

Thus the exact impact interest rate hikes could have on stock prices would be anyone’s guess. However, we can note that the market has become used to low rates. Therefore, companies and investors will have to make some adjustments leading to increased volatility in asset prices. High frequency trading also contributes to intraday choppiness.

The new week could see wild swings that pressure broader markets. In general, corrections (or down moves) in equities happen rapidly. Meanwhile, the dollar, which has been trading higher against most major currencies, could continue the trend up.

We recently introduced two exchange-traded funds (ETFs) that could be appropriate for investors who want to adjust their portfolios for inflationary times ahead. Today, we extend that discussion.

h2 1. SPDR SSGA Multi-Asset Real Return ETF/h2
  • Current Price: $28.25
  • 52-Week Range: $20.89 - $29.61
  • Dividend Yield: 1.77%
  • Expense Ratio: 0.50% per year

The SPDR® SSgA Multi-Asset Real Return ETF (NYSE:RLY) invests in other ETFs that hold inflation protected securities, both domestic and international real estate securities, commodities, and shares of natural resources, including agriculture, energy, and metals and mining companies. The fund’s objective is both capital appreciation and current income.