WisdomTree has registered with The Securities and Exchange Commission (SEC) to launch a new exchange traded fund (ETF) that seeks to give investors protection from inflation.
The new ETF WisdomTree has in the hopper, the WisdomTree Real Return Fund (NYSEArca: RRF), seeks to give investors long-term returns above the rate of inflation.
Liquidity has flooded the U.S. market, giving rise to investor fears that inflation will soon become an issue. This new fund aims to give investors another way to hedge it, explains Cinthia Murphy for Index Universe.
The fund’s primary goal is for its portfolio to have an average effective duration of two to 10 years, and maturity lengths will vary. The longer the duration of the securities, the more susceptible the fund is to interest rate fluctuations and volatility. (Read on about ways to hedge inflation with ETFs).
RRF will also deliver exposure to commodities, such as energy, precious metals and agriculture. RRF will compete directly with IndexIQ’s newest offering, IQ CPI Inflation Hedged (NYSEArca: CPI). (More about CPI can be found here).
Inflation fears have fueled an increase in products designed to hedge it. PIMCO recently launched the first short-term TIPS ETF, PIMCO 1-5 Year U.S. TIPS Index (NYSEArca: STPZ), and other providers also have TIPS funds. (How TIPS work).
For more stories about TIPs, visit our TIPs category.
- iShares Lehman TIPS Fund (NYSEArca: TIP)
- SPDR Barclay TIPS ETF (NYSEArca: IPE)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.