An exchange traded fund that likely evades many “screens” in the institutional marketplace due to lower average daily trading volume (5,429 shares traded on average daily) is IQ Real Return ETF (NYSEArca: CPI).
CPI’s objective is to provide the investor with a hedge against the inflation rate in the U.S. by delivering a real return that exceeds the actual rate of inflation (with that rate being tied to the Consumer Price Index or CPI).
Currently, CPI owns other ETFs including iShares Short Treasury Bond (NYSEArca: SHV), SPDR 1-3 Month T-Bill (NYSEArca: BIL), iShares Russell 2000 (NYSEArca: IWM), CurrencyShares Japanese Yen (NYSEArca: FXY) and PowerShares DB Gold (NYSEArca: DGL).
ETFs such as iShares Barclays Treasury Inflation Protected Securities Bond Fund (NYSE: TIP) and other inflation protected bond ETFs have obviously had a strong run in the past year or so, with TIP up 4.14% in the trailing one year period and trading recently at multi-year highs.
In the event that interest rates in the overall marketplace were to rise, securities such as TIP may falter, which may make CPI a very interesting alternative due to the methodology and the mandate of the fund itself.
Chart source: StockCharts.com.
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