A New Fund to Hedge Inflation

Horizon Kinetics Inflation Beneficiaries ETF, introduced in January, offers some tools to battle inflation.

businessperson balancing coins on seesaw
(Image credit: Getty Images)

Economists can (and do) argue over just how permanent current inflationary pressures are. But they agree that consumer costs are soaring. Kiplinger forecasts 5.4% inflation through the rest of 2021, easing to 3% in 2022 – higher than the 2% average between 2016 and 2019.

Investors have some familiar tools to beat back inflation. Treasury inflation-protected securities come to mind first, and commodity funds and stocks tend to act as nice hedges as well.

The new-ish Horizon Kinetics Inflation Beneficiaries ETF (INFL (opens in new tab)), introduced in January, offers another, more diversified way to crack that egg. The exchange-traded fund has rapidly amassed $675 million in assets.

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Inflation Beneficiaries invests in a roughly 50-50 split of domestic and international firms that are exposed – directly or indirectly – to assets that should increase in value alongside inflation, but that don't incur much in extra business expenses themselves.

"These companies do not need to spend a lot of money to earn their returns," says Todd Rosenbluth, head of ETF and mutual fund research for Wall Street research firm CFRA.

Materials-sector stocks such as miners Franco-Nevada (FNV (opens in new tab)) and Wheaton Precious Metals (WPM (opens in new tab)) make up 22% of INFL's assets, and the energy sector claims another 19%. But tops in the ETF are financial stocks – including German marketplace organizer Deutsche Börse and New York–based insurer and professional services firm Marsh & McLennan (MMC (opens in new tab)) – which make up nearly one-third of the portfolio.

Kyle Woodley

Kyle Woodley is the Editor-in-Chief of Young and The Invested (opens in new tab), a site dedicated to improving the personal finances and financial literacy of parents and children. He also writes the weekly The Weekend Tea (opens in new tab) newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley (opens in new tab).