First Trust Advisors has launched the First Trust Bloomberg Inflation Sensitive Equity ETF (NYSE Arca: FTIF), a new ETF that invests primarily in U.S. exchange-listed companies within sectors that are expected to benefit, either directly or indirectly, from rising prices. The fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Bloomberg Inflation Sensitive Equity Index.
When inflation rises, the purchasing power of money erodes, and it becomes important to seek strategies to generate additional income. Concerns over high inflation have led investors on a search for ways to seek durable return streams that have the potential to keep pace with inflation.
FTIF aims to navigate the challenging effects of inflation by investing in companies in the energy, materials, and real estate sectors that generate high free cash flow and have shown historically strong performance during inflationary cycles. The fund has an expense ratio of 0.60%.
“We believe that high inflation is one of the most important challenges that investors are facing in 2023,” said Ryan Issakainen, senior vice president and ETF strategist at First Trust. “High quality stocks from sectors that have historically benefitted from rising prices may help investors navigate this environment.”
Dave Gedeon, head of index product, Bloomberg Index Services Limited, added: “Bloomberg is excited to work with First Trust on an index for an ETF which utilizes a factor approach to target companies which may be better positioned to weather the challenge of persistent inflationary pressures. Bloomberg’s Product Development is focused on building indices seeking to solve modern day investment problems and we are proud to support First Trust in tackling inflation with an equity solution.”
The listing of FTIF follows the recent launch of the First Trust Bloomberg Emerging Market Democracies ETF (NYSE Arca: EMDM), which focuses on companies in emerging market countries where political rights and civil liberties are highly regarded. EMDM seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Bloomberg Emerging Market Democracies Index.