Why Invest in an Inflation ETF Portfolio?
An Inflation ETF portfolio could be a potential inflation protection strategy. In 2022, global inflation accelerated for the first time in 30 years following loose pandemic-era monetary policies, geopolitical turmoil and rising energy prices. Catching everyone by surprise, it put pressure on households and investors. However, an Inflation ETF could help to safeguard your spending power and the value of your investments. Various asset classes could help achieve this goal, but it is also possible to combine several equity ETFs that historically responded well to inflationary pressures.
- An inflationary environment inevitably leads to a decline in the purchasing power of consumers
- Investors can turn to financial markets as a protective measure from inflationary pressures such as a decline in real income
- Certain asset classes, including inflation-protected bonds, commodities, and certain equity sectors, could all benefit an Inflation ETF Portfolio
- Inflation is a general increase in the prices of goods and services in an economy
- The common measure of inflation is the inflation rate, the year-on-year change in a general price index
- Inflation can also be measured by the Consumer Price Index (CPI)
- Changes in measured CPI track changes in price over time