Why Multi-Asset ETFs May Be Your Go-To Inflation Solution

In this article, we will explore multi-asset inflation ETFs that provide investors with an all-in-one solution to hedge against inflation risk.

 We will discuss why multiple assets are needed to effectively hedge against inflation, the benefits of diversification across inflation hedges, and the advantages of professional oversight and active risk management. Keep in mind that while a strategy intended to manage risk cannot ensure a profit or protect against loss in a declining market.

Why Multiple Assets Are Needed to Help Mitigate Inflation Risk

Financial market history tells us which assets have performed well versus inflation, but history also tells us these results vary and are not always positive. A multi-asset inflation-sensitive ETF may serve as an inflation-sensitive solution for three important reasons:

1. Diversification Across Inflation Hedges

No singular inflation-sensitive asset is likely to outperform others consistently over the course of an inflation cycle. Inflation-sensitive portfolios benefit from diversification, as different assets may perform better during different inflationary environments. By combining various inflation hedges, investors can increase the likelihood of positive returns across changing market and economic conditions.

2. Professional Oversight

Multi-asset inflation ETFs are typically managed by experienced investment professionals who actively allocate and adjust the portfolio as market circumstances unfold. This active management can enhance the effectiveness of the inflation hedging process and adapt to evolving inflationary trends.

3. Active Risk Management

Inflation can be a complex and dynamic risk to manage. Active risk management within multi-asset inflation ETFs can help control downside risks while seeking opportunities for growth.

Types of Actively-Managed, Multi-Asset Inflation ETFs

Active management is the hallmark of multi-asset ETFs designed to navigate inflation’s challenges. Such funds are run by portfolio managers who make investment decisions based on market analysis, fundamental or quantitative security selection and economic forecasts. Some of these ETFs offer focused mandates and allocation bands; others have wide and flexible mandates. Portfolio implementation can include the following approaches:

1. Individual Securities

Some multi-asset ETFs may invest directly in individual inflation-sensitive securities, such as select equities, natural resource stocks or TIPS.

2. ETF Funds-of-Funds

Other ETFs may allocate their assets across various existing ETFs that focus on different inflation hedges, creating a fund-of-funds structure.

3. Combination of Individual Securities and ETFs

Some ETFs blend individual securities and ETFs to construct a diversified multi-asset inflation-sensitive portfolio.

Right for You?

Multi-asset inflation ETFs offer investors a convenient and diversified solution to hedge against inflation risk. By combining various inflation hedges and leveraging professional oversight and active risk management, these ETFs aim to provide effective protection and potential growth during inflationary periods.

Investors seeking a comprehensive approach to inflation-sensitive investing may consider “all-in-one” ETFs to simplify their investment strategy while navigating inflation. As always, investors should carefully evaluate their risk tolerance and investment objectives before making any investment decisions.

Build an Inflation-Sensitive Portfolio with ETFs

Understanding inflation and inflation-sensitive investments is a good start. Building an inflation-resilient portfolio is your next step. Fortunately, the universe of user-friendly, tax-efficient and low-cost ETFs offers a wide variety of choices for inflation-sensitive investors. 

As with any investment, individual risk tolerance, time horizon and long-term investment objectives should guide the allocation decisions. By thoughtfully incorporating ETFs with inflation-hedging potential, investors may be able to bolster their portfolios and position themselves to navigate inflation’s challenges.

This information is educational in nature and does not constitute investment advice. These views are subject to change at any time based on market and other conditions and no forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of any investment or trading intent. This content should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by AXS Investments or any third-party. All investing is subject to risk, including the possible loss of the money you invest.

Investors should carefully consider the investment objectives, risks, charges and expenses of AXS Astoria Inflation Sensitive ETF. This and other important information about the Fund is contained in the Prospectus, which can be obtained by visiting www.axsinvestments.com. The Prospectus should be read carefully before investing.

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