Perhaps no news story defined the year for markets as thoroughly as the question of inflation has. From the definitional debate about whether inflation was sticky or transitory to the market’s refusal to bow to the Fed’s historically aggressive rate hike campaign, inflation and its consequences have investors looking for the right ETFs to respond. For more, here are the top three inflation stories by readership this year.
Siegel: Inflation Is “Not Worth the Price of Crashing the Economy”
If it weren’t clear already, inflation has driven a lot of debate this year, and even more so when considering the controversy around the Fed’s response. Chair Jerome Powell has made it clear that the Fed is willing to significantly slow down the economy in order to tame inflation, but according to WisdomTree senior investment strategy advisor and Wharton finance professor Jeremy Siegel, that may be a mistake.
Siegel shared his thoughts in September, earlier in the Fed’s hike spree, citing signals that inflation was already cooling, with softer CPI prints following in October and November. The piece detailing his comments proved the most-read inflation story of the year.
“In my opinion, we don’t need a Fed funds rate of four and a half to five percent, which is almost what the Fed Funds Futures are predicting: my feeling is that we need a Fed funds rate that is more in the neighborhood of the four percent level and that the Fed should recognize this fact,” said Siegel at the time. “If they don’t, they risk a recession going forward.”
As Inflation Hits, Get Infrastructure Exposure
Infrastructure has become a popular topic for those looking for a way to resist inflation, as President Joe Biden’s infrastructure spending plan kicks into gear. The second most-read story of the year related to inflation focused on infrastructure, tied to a podcast discussion on the topic in March.
Defensive approaches like infrastructure, real estate, and other areas can factor in for investors looking ahead to next year, with dividends also proving a popular approach. Among some interesting dividend ETFs available is the WisdomTree US High Dividend Fund (DHS), a dividend ETF in the top five based on YTD returns.
ETF Prime: ETFs for Rising Rates and Inflation
Closing out the top three most-read inflation-related pieces from VettaFi is a wrap-up from the ETF Prime podcast. The episode from March focused on finding the right ETFs for rising rates and inflation, which has been a key task for investors of all kinds this year.
VettaFi’s head of research Todd Rosenbluth joined host Nate Geraci on the podcast and talked about additional dividend-related strategies like the Vanguard Dividend Appreciation ETF (VIG) and the iShares Select Dividend ETF (DVY). Outside of dividends, the discussion also touched on inflation-specific strategies like the AXS Astoria Inflation Sensitive ETF (PPI) which launched almost one year ago.
With inflation looking to hang around well into next year, investors are rightly investigating ways to look at rising prices. This year’s top three inflation stories show just some of the myriad ways to think about investing in an inflationary regime, which will remain an important topic in the months ahead.
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