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As inflation concerns grow even louder, these ETFs are profiting from the situation


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Inflation worries continue to weigh on Wall Street, as the latest Core CPI print came in above economists’ forecasts. The prospect of higher prices put more pressure on the major U.S. equity indices, which have already suffered a severe slump in 2022.

Still, while inflation remains elevated, there is a group of exchange traded funds that are profiting from the ongoing inflationary environment. Four funds in particular stand to benefit:

Simplify Interest Rate Hedge ETF (NYSEARCA:PFIX), SPDR SSGA Multi-Asset Real Return ETF (RLY), ProShares Inflation Expectations ETF (RINF), and the VanEck Inflation Allocation ETF (RAAX).

Through the course of 2022, all four funds trade in the green and have far outpaced benchmark index ETFs that track the major markets. Year to date, PFIX has surged +64.2%, RLY has gained 8.8%, while RINF and RAXX are up 5.7% and 4.1%, respectively.

All have outdone the leading ETFs that track the S&P 500, Dow Jones, and Nasdaq. The SPDR S&P 500 Trust ETF (NYSEARCA:SPY), SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA), and the Invesco QQQ Trust (NASDAQ:QQQ) are all down 16.8%, 12.1%, and 25.9%, respectively.

PFIX aims to hedge against interest rate movements which work hand in hand with inflation. T­he fund holds a large position in over-the-counter interest rate options that are intended to provide direct and transparent exposure to large upward moves in interest rates and interest rate volatility.

The continued focus on inflation comes as the latest April CPI numbers were released on Wednesday. The consumer price figures were higher than the market consensus.

Core CPI came in at +0.6% vs. the +0.4% consensus and +0.3% prior print. Economist Mohamed El-Erian pointed out that the 0.6% increase in core CPI and the breadth of pricing pressures are “particularly worrisome.”



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