The fed has been raising interest rates since March 2022 to help battle inflation. And more rate hikes could be coming as inflation still isn't firmly under control. One way for investors to try to offset these challenges is by holding stocks that are resilient to inflation.
The AXS Astoria Inflation Sensitive ETF (NYSE Arca:PPI) is an exchange-traded fund (ETF) which is actively managed and that focuses on cyclical stocks and commodities. It has 49 holdings with oil and gas companies playing a prominent role. EOG Resources (NYSE:EOG), Devon Energy (NYSE:DVN), and Suncor Energy (TSX:SU)(NYSE:SU) are all among its top 10 holdings, accounting for at least 2.9% of the fund's weight. The fund also invests in treasury inflation-protected securities (TIPS), which are indexed to inflation.
Since 2022, the ETF has risen by 3% while the S&P 500 is down by close to 8%. This year, however, with growth stocks on the rise and investor sentiment improving, the fund is down by around 2% versus the S&P's gains of nearly 15%.
The fund can be a good hedge when economic conditions are concerning and keeping investors away from growth stocks. But under more favorable conditions, this fund may not result in strong returns for investors. With an expense ratio of 0.76%, the Astoria Inflation Sensitive ETF can be pricey given its modest returns.
However, if you value stability and are worried about inflation, it can be a good investment to put into your portfolio. The fund pays a dividend that yields 3.1%, which can also be an excellent source of recurring income for long-term investors.
