Gold, commodities, and Treasury inflation-protected securities (TIPS) are just a few ways to hedge against inflation. iShares offers ETFs tailored to all three.
“We’re going to cross 3% inflation at some point this year on an annualized basis,” said Dave Nadig, Chief Investment Officer and Director of Research of ETF Trends and ETF Database. “Everybody I trust and all the research I’ve done suggests it’s going to be pretty transitory, though. Sustained inflation would require a radical shift in consumption; something would have to be the catalyst.”
These three funds can help make a portfolio inflation-ready:
1. iShares Gold Trust (IAU)
IAU seeks to reflect the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities.
The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold. The advisor intends to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing, and insurance of the metal.
IAU provides investors:
- Exposure to the day-to-day movement of the price of gold bullion
- Convenient, cost-effective access to physical gold
- Use to diversify your portfolio and help protect against inflation
2. iShares TIPS Bond ETF (TIP)
TIP seeks to track the investment results of Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L), which is composed of inflation-protected U.S. Treasury bonds.
The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. It may invest up to 10% of its assets in U.S. government bonds not included in the underlying index, but which BFA believes will help the fund track the underlying index, and may also invest up to 5% of its assets in repurchase agreements collateralized by U.S. government obligations and in cash and cash equivalents.
TIP provides investors:
- Exposure to U.S. TIPS, which are government bonds whose face value rises with inflation.
- Access to the domestic TIPS market in a single fund.
- Protection against intermediate-term inflation.
3. iShares Commodities Select Strategy ETF (COMT)
COMT seeks total return by providing investors with broad commodity exposure. The fund seeks to achieve its investment objective by investing in a combination of exchange-traded commodity futures contracts, exchange-traded options on commodity-related futures contracts, and exchange-cleared commodity-related swaps (together, “Commodity-Linked Investments”), thereby obtaining exposure to the commodities markets. It is an actively managed fund that does not seek to replicate the performance of a specified index.
COMT provides investors:
- Access to commodities across energy, metals, agriculture, and livestock sectors, through a rules-based futures strategy designed to minimize costs associated with futures investing.
- Simplified tax filings with no K-1 tax reporting.
- Use to diversify a portfolio and potentially protect against inflation.
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