Money is Flowing into Funds That Provide a Hedge Against Inflation
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According to Morningstar, at the end of October 2021, the Consumer Price Index was up 6.2% from a year earlier. Meanwhile, investors have poured money into Morningstar Categories that : commodities broad basket, commodities focused, and inflation-protected bond. This increase has closely followed the Consumer Price Index over the past three years. As price levels increased, so did flows into these categories.
Starting in July 2020, investor sentiment changed, and money poured into inflation-protected bond funds. The category has received record inflows over the past year. Funds in the commodities broad basket category have not seen a large increase in flows during the three-year period, but investor interest has picked up in recent months.
Starting in July 2020, investor sentiment changed, and money poured into inflation-protected bond funds. The category has received record inflows over the past year. Funds in the commodities broad basket category have not seen a large increase in flows during the three-year period, but investor interest has picked up in recent months.
Among the strategies in these three categories, Vanguard Short-term Inflation-Protected Securities ETF (VTIP), which has a Morningstar Analyst Rating of Gold, is the largest and has had the most net inflows over the past three years. It took in $25.9 billion for an organic growth rate of 46%.
Another inflation-protected bond fund, Gold-rated Schwab U.S. TIPS ETF (SCHP), had the second-highest inflows. It received almost $14 billion for an organic growth rate of 65%.
Two exchange-traded funds that invest in gold, iShares Gold Trust (IAU) and SPDR Gold Shares (GLD), brought in the third- and fourth-highest inflows over the past three years, even though both funds have experienced outflows over the past year along with other precious-metals funds. (Neither fund has an Analyst Rating.
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