INFL - INFL: Have We Reached Peak Inflation

• This INFL ETF does well during inflation.
• Inflation appears to have peaked so INFL might decline in short term.
• The U.S. national debt is the main cause of inflation.

As we all know, the inflation numbers were reported on Aug 11 when the CPI ( Consumer Price Index ) clocked in at 8.9%, which is quite elevated for a Western country.

Remember, much of this is due to high national debt (e.g., over $30+ trillion), as hinted here.

Many are suffering from this, as it is a form of tax for many households. Refer to this chart to see how the Federal Reserve has increased the M2 money supply over the last two years.

Is this a decent ETF to choose to benefit from inflation?

There are about 4 exchange-traded funds ("ETFs") one could choose from to benefit from inflation, depending on your broker. Unfortunately, as I hinted, many ETFs have been returning negative numbers all year in 2022. However, if you take a look at the tearsheet, you can find there is one positive-returning ETF called:

Horizon Kinetics Inflation Beneficiaries ETF ( INFL ).

As the title of this ETF says, you could hold stocks benefiting from inflation. One pattern to note is their strong correlation to the benchmark of S&P 500 (SPY) found in the tearsheet.

In terms of this ETF , you can see some positives, including $1.3 billion in holdings and a relatively low expense ratio of 0.85%.

As for holdings , this ETF contains the usual anti-inflation stocks like gold and real estate.

Tearsheet access

One of a few primary metrics I look for is a Sharpe ratio of 0.34, which is relatively weak with a manageable max drawdown of -16%. Do remember, it has been an incredibly volatile 2022 so far.

Inflation Outlook

I believe we have reached peak inflation due to recent big drops in oil and gas prices. However, do remember that CPI got to 9% back in June. Therefore, I would highly recommend watching this ETF month to date daily. In the short run, this might be an ETF to consider selling on a short-term basis (e.g., 30-60 days).

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