Equally weighted ETFs portfolios bring simplicity on the construction and rebalancing level but very often the simplest solutions tend to deliver the best results. There are many investors looking for this sort of approach. In order to tackle inflation and moreover the forthcoming stagflation, this 5 ETFs based solution could be a quick fix to hedge your investments. You can also make this portfolio as a dedicated basked to hedge against inflation in the context of your bigger investment scheme.
Even, if you dislike the equally weighted approach, you can just check out the ETF ideas proposed below which you may want to utilize on your side to meet your investment objectives. The ETF ideas are based on the the LSE listings, however in most cases the equivalents can be easily accessed on the other major exchanges.
Portfolio Basic Parameters
- Portfolio Objective: Capital Protection Against Inflation
- Portfolio Composition Type: Equally Weighted ETFs
- Portfolio Type: Multi-Asset
- Average ETF TER: 29 bps
- Number of ETFs: 5
- Underlying ETFs:
20% RMAU – HANetf The Royal Mint Physical Gold ETC
20% CRUD – WisdomTree WTI Crude Oil
20% DPYA – iShares Developed Markets Property Yield UCITS ETF
20% ITPS – iShares $ TIPS UCITS ETF
20% CSPX – iShares Core S&P 500 UCITS ETF
Recommended Rebalancing: Semi-Annual or Annual
Portfolio ETF Quick Insights
1. HANetf The Royal Mint Physical Gold ETC (RMAU LN)
1.1 Investment Case
- Gold is the most popular hard asset and inflation hedge.
- This precious metal is seen as a “store of value”.
- RMAU Gold is held in custody at The Royal Mint’s highly secure vault.
1.2 Basic Key Parameters
- Inception: 12/02/2020
- Size: $0.5bn
- TER: 22 bps
2. WisdomTree WTI Crude Oil (CRUD LN)
2.1 Investment Case
- Another very popular commodity.
- Oil sees strong demand during military conflicts especially when a country producing oil is a side of the conflict. This is the case with Russia now, one of the biggest oil producers in the world.
- This exchange traded product provides investors with a very convenient access to participate directly in the oil market instead of buying single stock names of the oil producers for indirect exposure.
2.2 Basic Key Parameters
- Inception: 27/09/2006
- Size: $1.2bn
- TER: 49 bps
3. iShares Developed Markets Property Yield UCITS ETF (DPYA LN)
3.1 Investment Case
- Real estate like gold or oil is a physical asset that is sensitive to inflation.
- Direct investment into listed real estate companies and REITS.
- Regional exposure with a focus on income.
- DPYA is one of the largest real estate funds listed on the LSE.
3.2 Basic Key Parameters
- Inception: 14/05/2018
- Size: $2.4bn
- TER: 59 bps
4. iShares $ TIPS UCITS ETF (ITPS LN)
4.1 Investment Case
- Targeted exposure to US Dollar inflation-linked bonds.
- Direct investment in inflation-linked government bonds.
- Single country government bond exposure with inflation protection.
4.2 Basic Key Parameters
- Inception: 08/12/2006
- Size: $5.4bn
- TER: 10 bps
5. iShares Core S&P 500 UCITS ETF (CSPX LN)
5.1 Investment Case
- Research has proven over the years that the best strategy for investors tends to be a patient buy-and-hold approach. Over time, stocks almost always tend to go up significantly.
- This iShares fund that offers exposure to the largest, established U.S. corporations should continue to be a good investment even amid inflationary pressures.
- This ETF seems like a perfect component of your portfolio to seek long-term growth, it is big in size, extremely liquid and very cheap.
5.2 Basic Key Parameters
- Inception: 19/05/2010
- Size: $60.5bn
- TER: 7 bps
What are the other ETF ideas to hedge against inflation?
There are many ways to hedge your portfolio against inflation. On the ETF idea generation and selection level you may want to consider the following U.S. listings.
If you are interested in the European listing equivalents, please send us a direct message to discuss the best investment alternatives.
At Algo-Chain we track over 10k ETFs listed globally and deliver optimized model ETF portfolio solutions driven by artificial intelligence and data science.