Hedging inflation: ETF strategies for chasing market swings

Moomoo Learn joined discussion · Aug 5, 2022 16:35

After months of pain in 2022, investors finally got a reprieve since July 1st. The S&P 500 has been up nearly 10% till now.

Hedging inflation: ETF strategies for chasing market swings

Whether or not this just turns out to be a temporary bear market rally remains to be seen.

After all, we can see inflation is still roaring, and interest rates are starting to stifle growth and manufacturing. The US economy just experienced its 2nd straight quarter of negative GDP growth.

ETF strategies for chasing inflation

To ride out the market volatility amid high inflation and continued uncertainty from the Federal Reserve, investors could seek to utilize ETF products that are issued for investors to chase the inflation trade.

Here we list two examples:
$DIREXION BREAKFAST COMMODITIES STRATEGY ETF (BRKY.US)$
As its name implies, the ETF is designed to provide exposure to commodities that can be found on everyone's breakfast table – including coffee, sugar, wheat and orange juice.

$SIMPLIFY INTEREST RATE HEDGE ETF (PFIX.US)$
The fund seeks to hedge interest rate movements arising from rising long-term rates and to benefit from market stress when fixed income volatility increases, while providing the potential for income.

The booming ETF market

For the past few years, the ETF market has witnessed a continued booming trend.
As is shown in the chart below, more and more investors are buying equity ETF instead of a single stock.

In fact, the year-to-date inflows for U.S.-listed ETFs have climbed to $342.8 billion in 2022. Combined with the rise in asset price, AUM climbed to $6.55 trillion.

As FactSet Director of ETF Research Elisabeth Kashner wrote last week, 2022 inflows are on track to exceed all annual inflows records, except for 2021.

If you want to learn more about ETF investing, please click: 【Features of ETFs】