Rising inflation calls for a tailored portfolio that’s bespoke for the current market landscape. ETF provider FlexShares has a pair of funds to suit the challenges investors currently face.
That biggest challenge, of course, is rising inflation. Fixed income investors are constantly on the lookout for yield, which can be available via dividends with funds like the FlexShares Quality Dividend Index Fund (QDF ).
QDF seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust 1250 Index, a float-adjusted market capitalization-weighted index of U.S.-domiciled large- and mid-capitalization companies.
“Over the long run, owning equities with an above average, resilient dividend yield has resulted in similar performance to broad equity indices but with less drawdown and volatility,” said Ninety One Global Income Opportunities. “The narrowness of markets over the last two years, when high-growth equities have dominated, has left sustainable-dividend stocks attractively valued whilst also possessing the ability to grow income – a valuable trait at a time of heightened inflation.”
With consumer prices on the rise, getting exposure to real assets can also help with hedging inflation. One fund to get all-encompassing exposure to real assets is the FlexShares Real Assets Allocation Index Fund (ASET ).
As opposed to holding multiple assets like precious metals or commodities like oil, ASET can give investors exposure to it all through one position. Additionally, volatility is minimized due to ASET holding companies that represent real asset exposure versus the actual tangible assets themselves.
ASET seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation Index. The underlying index measures the performance of an optimized allocation to the underlying funds that is intended to provide exposures to certain real assets and minimize the overall volatility of an investment in the underlying funds.
“We believe inflation fears will remain elevated in the first half of this year and maybe longer if a more virulent strain of COVID were to materialize,” said David Coombs, manager of Rathbone Strategic Growth Portfolio. “In order to mitigate both inflation and geopolitical risk, we think an exposure to more economically sensitive commodities makes sense, industrial metals, energy and agricultural.”
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