ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF of the Week: Merk Stagflation ETF
News
Share

ETF of the Week: Merk Stagflation ETF

Karrie GordonMay 19, 2022
2022-05-19

VettaFi’s Vice Chairman Tom Lydon discussed the Merk Stagflation ETF (STGF B) on this week’s “ETF of the Week” podcast with Chuck Jaffe of “Money Life.”

Inflation has really become the top concern and term for this year, Lydon explained, with money moving around at phenomenal rates.

“There’s a lot of money in motion; since we’ve been tracking ETFs, we haven’t seen flows going in so many different directions as we have so far this year,” Lydon said.

Traditional portfolios with a 60% allocation to equities and a 40% allocation to fixed income are seeing definite negative impacts on the bond side from rising rates. So far in 2022, there have been more inflows to U.S. commodity ETFs than there have been to fixed income funds, a drastic difference from years past and something that has never happened before, according to Lydon.

“Especially for those that are close to retirement or are in retirement that had that safe haven in bonds where they could get some income that they could live off of, it’s not working. It’s not providing safety, and the income it’s providing isn’t enough to keep up with inflation,” Lydon said.

This has meant that advisors and investors have been shifting their allocations, seeking areas of income opportunity and refuge from the continued negative performance of much of fixed income.

STGF has a large portion of its allocations weighted into Treasury inflation protected securities (TIPS), thereby allowing the fund to remain current with inflation. TIPS can provide higher yield than traditional Treasuries, but Lydon cautioned that they don’t always offer downside risk protection.

“The other things it has allocations to areas like real estate, oil, gold, that also traditionally do well during times of inflation, and those areas help diversify the portfolio too,” Lydon explained.


Content continues below advertisement

A Different Core Strategy for a New Environment

The fund can be good for advisors and investors who may be concerned about the balances of their portfolios, particularly within fixed income, but don’t want to allocate hard into commodities. It could be a good play for those looking to pivot 10%–20% of their fixed income allocations, as it could potentially provide less pain for the portfolio as interest rates continue to increase, according to Lydon.

Investing into STGF isn’t a trend-following play but instead is a potential core strategy for those advisors and investors who have had long-term allocations in a traditional portfolio but are looking to pivot that portfolio in an extended inflationary environment.

“This is one of those core strategies at a time when we haven’t seen inflation as harsh in over 40 years. Not to fan the flames, but they changed the way they look at the CPI — it’s measured differently — and if we use the same metrics that we did back in the ’70s, we would be well into the double digits if we measured it the same way,” Lydon said.

Listen to the Entire ETF of the Week Episode Featuring Tom Lydon:

For more podcast episodes featuring Tom Lydon, visit our podcasts category.

» Popular Pages

  • Tickers
  • Articles

May 26

Main Management Market Note: May 26, 2023

May 26

Family Offices Embrace Crypto, While Needing Support

May 26

ETF Issuer League: Avantis, Summit Up, Global X

May 26

Active ETFs Positioned Better for Opportunities in High-Yield Bonds

May 26

Insurers Own Major Stakes in Fixed Income ETFs

May 26

Cash Flow Kings at Home With These ETFs

May 26

Counter U.S. Default Risk With Foreign Equity ETF AVDE

May 26

Vangaurd's EM Bond ETF Surprises With Fixed Income Protection

May 26

The Economy Matters: PCE, GDP, Durable Goods & Employment Numbers

May 26

SPYI Captures Huge Single Day Nvidia Pop, Enhances Income

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

JEPI

JPMorgan Equity Premium...

VTI

Vanguard Total Stock Market...

VOO

Vanguard S&P 500 ETF

VGT

Vanguard Information...

TLT

iShares 20+ Year Treasury...

BND

Vanguard Total Bond Market...

XLP

Consumer Staples Select...

BOTZ

Global X Robotics &...


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X