Target Inflation-Sensitive Stocks With This New ETF
Inflation is a problem that consumers and investors are both worried about. Rising costs can erode purchasing power and also chip away at a company's profit margin. While many stocks are exposed to that risk, there are some that can do well and take advantage of rising prices. If you're not sure how to gain exposure to those types of stocks, there's a new exchange-traded fund (ETF) that can help you with that.
The AXS Astoria Inflation Sensitive ETF (NYSE Arca: PPI). focuses on holding stocks that can benefit from inflation, stating that it, "invests in securities across multiple assets classes that have the potential to benefit, either directly or indirectly, from increases in the rate of rising costs of goods and services."
The actively managed fund invests in cyclical stocks, as well as commodities. As of Jan. 7, it had 50 holdings. Three of its top five holdings were financial institutions that can benefit from a rise in interest rates, including Regions Financial Corporation (NYSE: RF), Western Alliance Bancorp (NYSE: WAL), and Zions Bancorp (NASDAQ: ZION). Oil and gas stocks Marathon Oil (NYSE: MRO) and ConocoPhillips (NYSE: COP) rounded out the top five.
Energy stocks and financial stocks are similarly represented in the fund, with both accounting for around 29% of the total weight. Basic materials stocks are the third largest sector represented, at around 23%. And industrials make up another 16%. Investors won't get too much diversification from this fund but they will get some important protection from inflation.
The fund's inception was Dec. 30, 2021, and so it's a fresh new ETF without much of a history behind it yet. Its management fee of 0.7% isn't terribly high given it is actively managed. If you're worried about inflation, this is an ETF you should consider adding to your portfolio.