IYM - Why The Vanguard Materials ETF Is The (Third) Best Way To Play A Cyclical Rebound
Investment Thesis
In the aftermath of the last recession brought on by the global financial crisis, we saw an unprecedented era of low inflation which disproportionately benefited the cyclical consumer discretionary names. We think that low inflation is likely the new normal, even with exploding monetary policy and government deficits. However, if we see inflation pick up then Basic Materials will go from the back of the line to be a top performer in our view. We think Materials could outperform Energy given the global push toward climate regulation and energy efficiency becoming a defining