With the April consumer price index at 4.2% higher than a year ago (the biggest jump since 2008), this could mean an important change for investment strategy in a generation, and it calls for ways to fight again inflation.
Below are some old and new investment ideas that could protect you against inflation.
1. Traditional inflation hedges: gold, commodity, real estate, and TIPS. Consider fund: Permanent Portfolio (PRPFX), it has a diversified holdings: gold and silver, foreign currencies, high-grade short-term bonds, real estate and natural resources, and growth stocks.
2. Companies tat have a lot of hard assets and business models that are less reliance on capital and labor input. For example, financial service stocks, particularly exchanges and brokerage firms. Consider ETF: Horizon Kinetics Inflation Beneficiaries (INFL).
3. REITs with short-term lease agreements, so the rents could be reset frequently and rise with inflation. Consider ETF: Nuveen Short-Term REIT (NURE).
4. Investment products that are used exclusive to institutional investors only. For example, Quadratic Interest Rate Volatility and Inflation Hedge (IVOL) has 85% weight in TIPS notes which offers inflation protection as their face values are adjusted based on the CPI. But TIPS price could decline if interest rates rise, so tis fund has 15% in fixed-income options that would profit from rising long-term interest rates.
5. Because TIPS usually pay much lower yields than comparable Treasury notes, consider Simplify Interest Rate Hedge (PFIX), it allocates 50% to Treasury notes, and 50% in options that profit from rising long-term interest rates.
6. Floating rate corporate loan funds with income that outpaces prices. For example, Fidelity Floating Rate High Income (FFRHX).
Below are some old and new investment ideas that could protect you against inflation.
1. Traditional inflation hedges: gold, commodity, real estate, and TIPS. Consider fund: Permanent Portfolio (PRPFX), it has a diversified holdings: gold and silver, foreign currencies, high-grade short-term bonds, real estate and natural resources, and growth stocks.
2. Companies tat have a lot of hard assets and business models that are less reliance on capital and labor input. For example, financial service stocks, particularly exchanges and brokerage firms. Consider ETF: Horizon Kinetics Inflation Beneficiaries (INFL).
3. REITs with short-term lease agreements, so the rents could be reset frequently and rise with inflation. Consider ETF: Nuveen Short-Term REIT (NURE).
4. Investment products that are used exclusive to institutional investors only. For example, Quadratic Interest Rate Volatility and Inflation Hedge (IVOL) has 85% weight in TIPS notes which offers inflation protection as their face values are adjusted based on the CPI. But TIPS price could decline if interest rates rise, so tis fund has 15% in fixed-income options that would profit from rising long-term interest rates.
5. Because TIPS usually pay much lower yields than comparable Treasury notes, consider Simplify Interest Rate Hedge (PFIX), it allocates 50% to Treasury notes, and 50% in options that profit from rising long-term interest rates.
6. Floating rate corporate loan funds with income that outpaces prices. For example, Fidelity Floating Rate High Income (FFRHX).
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