Horizon Kinetics LLC announced the launch of its first ETF, the Inflation Beneficiaries ETF (INFL), an actively managed fund, which began trading on the New York Stock Exchange (NYSE) on Tuesday.
This active ETF will be managed using the same long-term, value-oriented, and proprietary research-driven philosophy that has guided the management of the Firm’s other products over the more than 20 years since Horizon Kinetics’ inception. INFL seeks to address what Horizon Kinetics sees as the largest threat facing investors: Inflation, by identifying unique, scalable businesses that have the potential to thrive in an inflationary environment.
“This is our first ETF, and we are launching it because we see an urgent need for a mechanism for inflation protection in the market,” said Murray Stahl, Founder, CEO, and Chief Investment Officer at Horizon Kinetics. “For some time, I have seen signs that we are moving toward an inflationary environment, and this trend has been accelerating of late. Debt levels have continued to rise, and central banks are loathe to raise interest rates (for a good reason). In our opinion, this leaves the creation of more money – inflation and currency debasement – as the most likely outcome.”
A Benefit To An Inflationary Environment
Stahl continued, “We are launching an ETF that seeks to be positioned to benefit in an inflationary environment. Importantly we do not think that inflation is required for the fund to perform well. Even if our expectation turns out to be incorrect, we think the lack of exposure to inflation beneficiaries in the major indexes could make the Fund a valuable diversification vehicle. It is actively managed because, as we have written for years, indexes have had a tendency to become top-heavy over time, which decreases diversification in the index. We wish to have the ability to maintain the diversification that most investors believe that they are getting when they invest in an index,”
“This portfolio is designed to provide a full cycle inflation exposure and seeks to thrive under many different inflation scenarios. We believe this is possible because the Fund emphasizes companies that have exposure to inflationary underlying assets, yet do not have high capital intensity,” added James Davolos, Portfolio Manager.
He continued, “We believe these ‘asset-light’ businesses have the ability to profitably endure low inflation for extended periods of time, compounding asset value and economic returns. Our research leads us to conclude that there is truly no other product like this in the market, and it represents something we believe all investors should consider when constructing a diversified portfolio,”
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