ETFs for High Inflation Exchange Traded Funds with Inflation | Summary and Q&A

TL;DR

Learn about six ETFs and one industry-related ETF that could perform well in a high inflation environment.

Key Insights

• 😋 Commodities, including oil, gas, food, and metals, tend to perform well in high inflation scenarios due to their essential nature and increasing demand.
• ✋ Gold and silver ETFs, such as BAR and GLD, offer exposure to precious metals and have historically been considered defensive investments during recessions and high inflation.
• 🧡 Investing in a diversified commodity ETF like ICON can provide exposure to a wide range of commodities beyond gold and silver.
• 🫢 Energy-based ETFs like XOP and VDE can benefit from rising oil and gas prices during inflationary periods.
• 💐 Agriculture-related ETFs like COW and PBJ are defensive investments as they encompass companies involved in various aspects of the agricultural industry.
• 😮 The material sector ETF (XLB) can be an early beneficiary of rising prices caused by inflation, with companies in this sector passing on costs to consumers and potentially enjoying increased profits.

Transcript

hi I'm Jimmy in this video we're looking at exchange traded funds that could do well in with high inflation now just so we're on the same page an exchange traded fund or an ETF for short is basically a basket of stocks it's a portfolio manager at some Wall Street company puts together rules that pick stocks or pick investment according to those rul... Read More

Questions & Answers

Q: How do ETFs work?

ETFs are portfolios of stocks managed by professionals according to specific rules. They can be focused on sectors, dividends, or other investment criteria. Investors can buy and sell ETF shares on stock exchanges.

Q: Why are gold and silver considered defensive investments in high inflation scenarios?

Gold and silver tend to perform well during recessions and periods of high inflation because they are seen as safe-haven assets. Their limited supply and historical value preservation qualities make them attractive during uncertain economic times.

Q: What advantages do ETFs like ICON and XOP have over investing directly in commodities?

ETFs like ICON and XOP provide exposure to commodities without the need to deal with physical assets or futures contracts directly. They offer diversification by investing in multiple commodities or companies within the industry, making them more accessible and liquid for investors.

Q: Why are energy-based ETFs recommended for high inflation environments?

Inflation often leads to rising oil and gas prices, which can benefit companies involved in exploration, production, and distribution. Energy-based ETFs like XOP and VDE invest in these types of companies, making them potentially profitable investments during high inflation.

Summary & Key Takeaways

• Exchange Traded Funds (ETFs) are baskets of stocks managed by portfolio managers based on specific rules. Some ETFs target sectors, dividends, or other investment criteria. This analysis focuses on identifying ETFs that could perform well in a high inflation scenario.

• The analysis highlights two historically defensive investments for high inflation: gold and silver. The GraniteShares Gold Trust (BAR) ETF focuses on gold and offers a lower fee compared to similar ETFs like GLD. The iShares Diversified Commodity ETF (ICON) provides exposure to various commodities through futures contracts.

• Energy-based ETFs, such as the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Vanguard Energy ETF (VDE), are also considered suitable investments for high inflation. XOP focuses on oil and gas exploration and production companies, while VDE covers the entire energy industry, including upstream, midstream, and downstream companies.

• Agriculture-related ETFs, like the iShares Global Agriculture ETF (COW) and the Invesco Dynamic Food & Beverage ETF (PBJ), are potential defensive investments due to their ties to the agricultural industry. COW invests in companies involved in farming and related activities, while PBJ focuses on food and beverage production and sales.

• Additionally, the Materials Select Sector SPDR Fund (XLB) ETF, which includes companies like Air Products and Chemicals, Sherwin-Williams, and Ecolab, could benefit from rising prices caused by inflation.