Simeon Hyman, global investment strategist at ProShares, understands that inflation is high, but doesn’t think it will stay at these elevated levels.
“Look. We have inflation. It’s high,” said Hyman at Exchange: An ETF Experience 2022. “Will it stay this high? Probably not. Will it stay higher than the long-term central bank target of 2%? Yes.”
Long-term, Hyman told VettaFi Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange: “make up a number between two and eight that’s probably where we’ll be in three or four quarters.”
With inflation currently “much higher than the Fed wants it to be,” Hyman thinks using digital assets to hedge against inflation “makes some sense.”
“There’s volatility there of course, so you want to think about the right proportion of that in a portfolio, but it certainly makes a lot of sense as a diversifying asset and as an inflation hedge,” Hyman said at Exchange: An ETF Experience 2022, noting that ProShares launched the first bitcoin ETF in the U.S. with ProShares Bitcoin Strategy ETF (BITO ) in October.
When discussing growth versus value in the equity space, Hyman said there’s “a misapplication of the… bond math to the equity market.”
“In other words, if interest rates are rising, why don’t I shorten the duration of my equity portfolio? To us, it doesn’t make a lot of sense,” Hyman said. “A stock with a P/E of 10 still has a duration of double the aggregate market. The salvation in equities must be some growth.”
While some of that growth can come from dividend growth and other “more evergreen solutions,” Hyman explained that “the real salvation from inflation and rising rates is growth and some of those technological innovations that we see.” This includes such ETFs as the ProShares Metaverse ETF (VERS ), which ProShares launched in March. VERS is designed to give investors access to leading companies tied to the growth of the metaverse.
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