Investors Are Able To Fight The Fear Of Inflation With ETF’s

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November 1, 2009 12:30am ETF BASIC NEWS NYSE:CRBQ

inflation“THE FEDERAL RESERVE’S POLICY MAKERS MEET this week to discuss monetary matters. Few observers expect a change in the central bank’s zero-percent interest rate, despite growing evidence that an economic recovery


 is at hand. “No one is worried about inflation right now,” says Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management. But there are concerns that the Fed’s policy of “quantitative easing” — code for printing boatloads of money — and the federal government’s stimulus program might result in a sharp rise in inflation several years down the road, he says,” Tom Sullivan Reports From Barron’s.

“Investors in exchange-traded funds appear to have just such fears. The iShares Barclays TIPS ETF (ticker: TIP), which invests in U.S. Treasury inflation-protected securities and has an expense ratio of just 0.2%, has had the biggest net cash inflows into any fixed-income category so far this year, gaining $7 billion through the end of September, according to Rye Brook, N.Y.-based IndexIQ,” Sullivan Reports.

“Commodity ETFs, another avenue to hedge against inflation, took in $25 billion through September. The biggest gainer of any ETF so far this year is SPDR Gold Trust (GLD), with $12.3 billion of net inflows, according to IndexIQ. Its expense ratio is 0.4%,” Sullivan Reports.

“ETF sponsors, naturally, have noticed. ALPS Advisors launched the Thomson Reuters/Jefferies CRB Global Commodity Equity ETF (CRBQ), subadvised by Arrow Investment Advisors, in mid-September. The fund tracks an index of 145 commodity producers, and has an expense ratio of 0.65%. As reported in this column, the fund allows investors to bypass futures-based commodity exposure while still playing in the commodity universe.,” Sullivan Reports.

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