Merk Investments has launched the Merk Stagflation ETF (NYSE Arca: STGF) to provide investors with exposure to investments that are expected to benefit from persistent inflation.
STGF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Solactive Stagflation Index, which seeks to track the performance of components that are expected to benefit, either directly or indirectly, from persistent inflation, including in an environment of weak economic growth (otherwise known as stagflation).
The fund is a dynamic basket of inflation hedges. Adhering to a systematic trend-following methodology, the Merk Stagflation ETF invests in gold, oil, real estate, and Treasury Inflation Protected Securities (TIPS), and dynamically rebalances allocations.
“The Merk Stagflation ETF is designed to provide appreciation potential and inflation-sensitive income in an environment of stagflation like that of the 1970s—characterized by high inflation rates, a bull market in commodities, and rising real estate prices. The strategy holds a basket of exposures across three asset classes: inflation-protected bonds, commodities, and real estate,” said Axel Merk, president and chief investment officer of Merk Investments, in a news release announcing the fund’s launch.
Daniel Lucas, managing director of quantitative research and trading, expands: “Allocation weights are systematically calculated and dynamically rebalanced using a proprietary trend-following methodology. It was in part inspired by the great success that trend-following strategies had in the 1970s.”
Nick Reece, vice president of macro research and investment strategy, added: “This is the first stagflation-themed ETF in the market. We think STGF will be embraced by advisors and retail investors concerned about inflation and about the outlook for traditional 60/40 portfolios more broadly—and that might be looking for an alternative to traditional fixed income allocations.”
Said Merk: “The Merk Stagflation ETF is a cost-efficient, one-click inflation hedge ETF, proving exposure to investments that might be a valuable diversifier in a stagflationary environment—while cutting out the headache of rebalancing trades.”
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