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Best ETF or Mutual Funds for severe inflationary cycle?

Good Morning Class,

Where would you invest at to what % of your portfolio to protect it from a severe inflationary cycle that is NOT temporary (this is contained to the subrime housing market, Ben Bernake, etc...)

I'm thinking this could be crazier than the 70's and 80's re inflation (I hope not)

Thoughts re:

INFL ETF Horizon Inflationary Benficiaries
DBCMX Doublelien Strat Commodity
PIRMX Pimco Inflation Response

FCX, Freeport McMoRan, stock, copper...bought a new house, plumbing is all CVPC/Pex vs copper

What say you?


Baseball Fan


  • edited May 3
    I think your question is pretty far out in left field. Whatever my thoughts on inflation or the economy I’d never risk all my assets on commodities, gold or other. Moderation in everything.

    PRAFX is a decent fund at TRP. Buys stocks that profit from inflation and holds significant real estate. I also like BRCAX at Invesco if you can get it load free. I wouldn’t overlook ABRZX, an allocation fund at Invesco. They keep about a third exposed to commodities. (I own small amounts of all 3 funds.)

    BTW - I recently took profits in some of the above mentioned funds and put the $$ in PRELX. It’s a mediocre non-hedged “local currency” EM bond fund. Should do well if the dollar keeps falling (in tandem with rising inflation). A safer option than playing gold and commodities directly - but more limited potential.

    A good real estate fund should benefit from hyper inflation.

    Equities in general are a good inflation hedge.

    All of the above are subject to reasonable prices. I can’t tell you which funds are fairly valued and which might be in assets that are in bubble territory.

    If you want confirmation for your own hyper-inflation thesis, you can pay $130 a year for Bill Fleckenstein’s daily online rant (I do). Bill would have you put a lot of your money into gold miners. But he’s been wrong for the past 1-2 years while gold has languished. (I did make some money in miners on his advice 3 years ago). He’s also been trying to short tech and other high flyers for several years without success, as those markets have screamed higher.

    Good luck.
  • @hank,

    Ha! I see what you did there...out in left field...apologies if I did not communciate my question clearly...did not mean to imply that I would put all or most of monies as an inflation hedge...just asking what % would most seem apropos, is it 10%, 15% etc.

    The Invesco funds you listed seem interesting, but...will admit I am shying away from derivatives, swaps and the like the looks of the PRAFX T Rowe fund, I'm going to ponder it further...

    I could be wrong but I have seen info that equities at times are NOT a good inflation hedge contrary to what many beleive. Equities took it on the chin in late 70s early 80's.

    Real estate intrigues me, home prices going thru the roof (pun intended), multi-family housing growing like weeds. Home Depot, bought out HDS HD Supply, had large div who sells to multi family developers etc..(Disclosure: I hold a lot of HD stock)

    Gold...has worked in the past but maybe Bitcoin is the ultimate either farce or statement/ clever investment in which many believe too much central banks have grossly increased their balance sheets and money supply??

    Have to hand it to Fleckenstein...he's been consistent thru the years on his views, maybe wrong, but consistent...and I'm hoping he still has that good hair...

    Take care/Best,

    Baseball Fan

  • My go to fund is EAPCX.
  • edited May 3
    … just asking what % would most seem apropos, is it 10%, 15% etc.”

    For many years I kept 10% in my “real assets” sleeve - which always included a commodity & real estate fund - and occassionally a mining fund. I kept another 10% in international bonds which might shelter against inflation too - and rebalanced back and forth between the two.

    For many years I lost $$ on the commodities part as they went through a brutal decade+ long bear market. A year ago may have seen rock-bottom when they were literally giving oil away on the futures markets - hard as it is to believe. The real estate and gold funds did better over that time - helped along with some tactical buying and selling. But commodities stunk.

    Growing more conservative with age, I’ve curtailed the real assets sleeve to 8%. Most risk assets have been curtailed. Not what my instincts would prefer. But I have no control over the aging process.

    The above doesn’t take into consideration a roughly 10% hold in PRPFX - which spreads the money all around - and includes gold, silver, natural resources & real estate. It runs hot and cold, so I’d be loath to recommend it to someone today after a nice streak.
  • Consider INFL ETF. It seems to follow a similar track to PRAFX, but since inception 1/11/21 to 5/3 it has come out ahead, INFL up 17.38%, to PRAFX up 13.34%.
  • I too like INFL. While it has a chunk of energy ( 20%) and gold, the other thesis is to concentrate on companies that have less exposure to rising prices of their input materials, but are "asset lite" figuring they will not be forced to raise prices as their input prices rise.

    One of the reasons for INFL's performance thus far is it's biggest position, Texas Pacific Land, which is up 120% YTD. TPL is the largest landowner in Texas, owning mostly arid oil and gas land in West Texas and fracking resources.

    It restructured as C-corporation in January, from a Trust, which may account for some of the rise in the stock price, as there is now no K-1. Horizon Kinetics who runs INFL has a long discussion about this and the trust on their web page. They are very bullish ( some of their funds are 50% TPL) and although TPL is into fracking and oil, it is even in several ESG funds.

    I don't own a lot but wish I had bought more.
  • Quick note:

    iBonds issued between May 1st and thru Oct of this year pay a combined rate (fixed and inflation) of 3.54%

    Exempt from state income tax, $10k annual purchase limit

    Probably a decent place to hedge inflation and earn a higher interest rate than in a money market, tbill, and likely most bond funds(?)


    Baseball Fan
  • edited May 6
    I Bonds are a great "safe" bond option in the current environment.
    The $10k annual purchase limit* may be a hindrance for those with larger portfolios.

    *additional $5k purchase available using your federal income tax refund
  • Interesting discussions and part of the topic of my next article on MFO. It is about a tactical approach to a portion of a portfolio. The bulk of my investments are in buy and hold mixed asset funds, and I am setting aside a portion for tactical funds which still focuses on lower risk funds. For inflation. I bought the Vanguard commodity fund VCMDX and EAPCX, and the Fidelity real return fund FSRRX, and inflation protected bonds.

    I am watching natural resource fund GUNR, and agriculture commodity fund DBA. Another idea is infrastructure fund NFRA. I also own gold equity stock. I have real estate funds, and they tanked with the threat of higher rates. Caution is justified.

    Stocks do better than bonds with inflation, but valuations fall, and with valuations so high, I am looking more to value and international funds.

    There are some great ideas in this discussion and I will check them out. I am considering setting tactical allocations at 25% of the portfolio, but not necessarily inflation hedges. High debt and aging demographics are deflationary. I expect increasing inflation in the short run, but will limit exposure to commodities.

    Thanks for the ideas.
  • WLMIY & LAND are individual stocks that I own.
  • I just bought 30 shares of PFE. I expect my massive purchase will send this stock soaring !
  • @carew388: are you batting .388 on your stock and fund picks?

    I can see playing the materials/natural resources sector by using one of my old favorites, FIW. It’s performance has been outstanding for the past 5 years and it does not have the volatility of other natural resources such as fossil fuels or lumber. It holds some great growth companies like Danaher and Ecolab and is light on international holdings. I think water is likely to be inflation-proof or even a beneficiary of rising rates.
  • Fortunately, not, although earning 3.88% on my money market funds would be a blast from the past! Of course, if I was batting .988, I would be typing this message from my 50 million dollar yacht parked at a harbor in St. Barts !
  • the stock LAND that you land...yes

    SIDE NOTE: just nearly fell over...have you bought flowers for Mom goodness, the prices have went up!! I actually think at higher rate of increase than lumber!?

    Baseball Fan
  • @Michelg I owned LAND for a few years, as diversification and the dividend, but got concerned about the debt level and sold it. It also has a very large exposure to California farms, and the fire situation there gave me pause. My cousin runs an avocado farm and almost was burned out.

    I have dipped my toe in commodity ETFs for awhile, using DBA, MOO, general natural resources ETFs HAP and a large copper company FCX. These are less inflation plays but more of a sustainable energy idea and climate change in general, without the high flying nature of ETFs solely focused on clean energy

    Most of the ETFs focused on commodities are heavily concentrated in energy.

    However, GCC from Wisdom tree is more broadly based with only 20% in energy.

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