ETF Trends CEO Tom Lydon discussed the Horizon Kinetics Inflation Beneficiaries ETF (INFL ) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
INFL is an actively managed ETF that seeks long-term growth of capital in real (inflation-adjusted) terms. It seeks to achieve its investment objective by investing primarily in domestic and foreign equity securities of companies that are expected to benefit, either directly or indirectly, from rising prices of real assets (i.e., assets whose value is mainly derived from physical properties such as commodities) such as those whose revenues are expected to increase with inflation without corresponding increases in expenses.
Worried about inflation? This ETF is for you. INFL is an ETF strategy to address rising inflation concerns. INFL will own stocks and invest in the equity of companies that are currently profitable and well managed. It avoids the typical industry focus on traditional investment categories and attempts to find unique, undiscovered, long-term value and price appreciation drivers.
With that in mind, these companies do not need inflation to be successful. These asset-light businesses have the ability to profitably endure low inflation for extended periods of time, compounding asset value and economic returns. One asset-light example today is Inter-continental Exchange [ICE]. Founded 20 years ago as a digital exchange, trading Brent crude-oil futures, and now a global powerhouse in the financial exchange, clearing, and data industry.
However, they are expected to benefit from inflation. The portfolio is designed to provide a full cycle inflation exposure and seeks to thrive under many different inflation scenarios. INFL emphasizes companies that have exposure to inflationary underlying assets yet do not have high capital intensity. This is a key feature differentiating INFL from other products intended to hedge against inflation.
Federal Reserve Chairman Jerome Powell, testifying before the Senate Banking Committee, said inflation would likely remain elevated in the coming months before moderating. Treasury Secretary Janet Yellen told CNBC that she expects the U.S. economy will see “several more months of rapid inflation.”