‘Reflation’ trades are resurfacing. Here’s where the money’s going
Resurfacing of “Reflationary” trades.
This month has seen a rise in leisure and travel stocks, thanks to exchange-traded funds like Invesco’s Dynamic Leisure and Entertainment ETF(PEJ), U.S. Global Jets ETF(JETS). AdvisorShares’ Hotel ETFAll (BEDZ), moving rapidly higher.
“We’re seeing rising interest ratesLydon stated that there is a threat of increasing interest rates in the U.S. but not all countries around the world.
He said that people are shifting to emerging markets because they offer better returns and don’t have to worry about central banks being too hawkish in the U.S.
You can diversify by investing in inflation hedges like the AXS Astoria Sensitive Exchange Fund (PPI), John Davi, Astoria Portfolio Advisors founder and CEO said during the interview.
Davi said, “Typically, after a recession, you get this wave higher value, cyclicals and inflation-sensitive stocks. So about a year ago, we created a formal inflation sensitive model portfolio,” and is also the chief investment officer of his company and PPI’s portfolio manger.
Davi stated that the ETF primarily holds bank, energy and industrial stocks. These are historically four of the best performing sectors after a recession. This ticker pays tribute to the popularly followed Producer Price IndexThis is the U.S. government’s measure of wholesale prices.
Investors and advisors need to allocate 5-10% of portfolios for inflation-focused products like Davi’s.
CPI stands at 7%. Davi stated that inflation is 15% when you look across the globe. This figure goes up even more when you consider costs for goods, grocery shopping, and home prices. Davi said, “If I was a financial adviser, I would be really looking at your portfolio and asking you what you could do on the margins to hedge against inflation.”
PPI has risen by nearly 5% over the past year.