On the “Claman Countdown” this week, ETF Trends’ CEO, Tom Lydon, discussed some of his top ETF picks at this time. Keeping in mind inflation, commodities, and the impact of recent events involving Russia’s actions, some notable funds are worth keeping track of.
The Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) is something to consider. It features an index composed of futures contracts on 14 heavily traded commodities across the energy, precious metals, industrial metals, and agriculture sectors. Meanwhile, gold hasn’t been the best inflation hedge.
There’s also the AXS Astoria Inflation Sensitive ETF (PPI). This is a newer, actively managed fund that focuses on industries and sectors that typically perform well during inflation, such as banks that can profit from rising interest rates by lending at higher rates, energy, and commodities. Equities and ETFs of companies in these sectors have historically benefited from inflationary periods.
Finally, there’s the Pacer U.S. Cash Cows 100 ETF (COWZ). COWZ provides broad-based U.S. large-cap equity exposure with the investment thesis that higher free cash flow is a mark of stability.
As Lydon states, regardless of tensions around the world, looking at these types of ETFs, there are still higher prices across the board. At the same time, the Fed may not be in a situation where they can enact higher rates with this tension, meaning there will only really be more raises in prices.
Keeping investors and advisors in mind, Lydon is aware that regardless of the Fed rate hike speed, bonds will continue to be challenged in 2022. In line with the U.S., equity valuation will have favorable value in developed and emerging markets. As such, it’s important to look at inflation plays, starting with funds such as the ones listed here.
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