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Inflation will be big market theme this year, two ETF experts agree


According to ETF experts, inflation will be a dominant market theme again in the coming year.

CNBC’s Tom Lydon said that “This will be a major story in 2022.”ETF EdgeOn Monday.

Plus, prices are rising and there is a need for more. Federal Reserve ready to raise rates in response could spell trouble for the fixed income market – longer-term bonds typically fall when interest rates are on the rise.

Most people forget what it was like to be able to make a fixed income investment during high interest rates. Fixed income portfolios are not well suited for this. “We’re constantly surveying advisors that are shifting their 60-40 strategies from 70-30 to 80-20,” Lydon stated. Lydon was referring to Lydon’s general rule of thumb, which states that a portfolio should be 60% equities and 40% fixed income.

Lydon suggests that instead of money going into bond ETFs like for instance, investors look to the possibility of receiving equity dividends. JEPI JPMorgan equity premium income ETF. The JEPI ETF’s price has risen by more than 12% over the last 12 months. Traditional bonds ETFs, such as the AGG core U.S. aggregate bond ETFThe BND total bond market ETFThey have all fallen.

Lydon said, “I believe we’re going see more of these types of strategies come up the surface.”

John Davi, chief investment officer at Astoria Portfolio Advisors has devised a way to protect against inflation if prices rise despite the Fed’s tightening of monetary policy. The firm also launched the PPI AXS Astoria inflation sensitive ETF.

“Going back a year, a year and a half ago, I was on CNBC and I said, ‘Look, I think rates are rising, inflation is rising… We’ve got seven ETFs that we’re trying to use to cobble together an inflation theme. Let’s examine a possible ETF that offers broad market access to all cyclical stocks, as well as physical commodities and TIPS. “

The ETF’s weight is 70% to 80% towards cyclical stocks and 10% to 15% for commodities. TIPS are 5% to 10%. The following are his top holdings: Western Alliance Bancorp, Regions Financial, Zions Bancorporation Devon Energy.  

“You must embrace” [inflation]Then, look for strategies to benefit the ETF’s four sector sectors: industrials, energy and materials, and finally banks. Davi explained that these are the sectors with historically high sensitivity to inflation.”

This week, the PPI ETF’s price has increased by nearly 4%. Comparatively, the S&P 500It has dropped more than 1%

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