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This ETF focused on inflation could be in an ideal position



Horizon Kinetics’ Inflation Beneficiaries ETF (INFL) is designed to profit from higher inflation rates, a strategy that portfolio manager James Davolos believes is well-positioned for the current economic environment. Despite the possibility of the Federal Reserve cutting rates, Davolos sees the fund as being in a favorable position as the economy enters a mature phase of inflation, with rates expected to range between three and five percent. The ETF was created in response to rising inflation post-Covid-19 pandemic, with a goal of diversifying investor portfolios by investing in companies that are considered “asset light” and “capital light.”

As of April 30, FactSet data shows that the Inflation Beneficiaries ETF’s top holdings include Wheaton Precious Metals, PrairieSky Royalty, and Viper Energy. The fund has underperformed the S&P 500 by about five percent so far this year, but Davolos believes that inflation-oriented ETFs offer more long-term stability compared to the current megacap rally. He predicts a reversal in tech stock buying as investors realize the potential benefits of inflation-oriented investments in the coming months. Despite its early performance, the Inflation Beneficiaries ETF has seen a 30% increase in value since its inception in January 2021.

It is important to note that investing in ETFs carries inherent risks, and past performance does not guarantee future results. Investors should carefully consider their risk tolerance and investment goals before committing to any fund, including the Inflation Beneficiaries ETF. Consulting with a financial advisor can help individuals make informed decisions based on their specific financial situation and goals. Additionally, the current economic environment is subject to change, and investors should stay informed on market developments and adjust their portfolios accordingly.

Horizon Kinetics’ Inflation Beneficiaries ETF offers a unique opportunity for investors to potentially benefit from rising inflation rates by investing in companies that are well-positioned to thrive in this environment. The fund’s focus on “asset light” and “capital light” companies aims to provide diversification and stability in a higher inflation environment. While the ETF has underperformed the S&P 500 this year, Davolos believes that its long-term prospects are strong and expects a reversal in tech stock buying as investors adjust to the new reality of higher inflation rates.

In conclusion, the Inflation Beneficiaries ETF may be a strategic tool for investors looking to diversify their portfolios and capitalize on rising inflation rates. While there are risks involved in investing in ETFs, the fund’s unique strategy and focus on companies positioned to benefit from higher inflation could provide stability and potential long-term gains for investors. It is important for individuals to carefully consider their investment goals and risk tolerance before deciding to invest in the Inflation Beneficiaries ETF or any other fund. By staying informed on market developments and seeking advice from a financial advisor, investors can make informed decisions that align with their financial objectives.

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