To The Moon

Exchange-traded fund investors are picking their spots in the market as inflation concerns rise, one trend watcher said.

ETF Action founding partner Mike Akins give opinion on CNBC:"Though ETF inflows and outflows have largely plateaued in recent months, sector shifts underneath the surface tell a different story.You can see big shifts out of Technology, Communications Services, into Energy and Financials. Right now, energy is the most overweight relative to theS&P 500” at 11% of the $600 billion U.S. sector ETF market".

Below are 6 specialty ETFs shared:

1. WisdomTree Enhanced Commodity Strategy Fund ($(GCC)$)

$(GCC)$ ETF feeling the heat: Commodity ETFs on the whole are benefiting from backwardation, or when front-month futures prices are higher than those further on the curve, making it profitable to roll futures contracts over.

Akins said:“I think we’ll see continued flows into this space and rightfully so, in our opinion at ETF Action.”

The top 2022 performer of WisdomTree’s 75 ETFs, GCC is being used as an inflation hedge, Jeremy Schwartz, global head of research and executive vice president at WisdomTree Asset Management, said in the same interview.

“Bonds don’t provide as much diversification as they used to,” Schwartz said. “There is this fear of inflation. Rates are heading up from the Fed. What do you do for a standard 60-40 portfolio allocation? Commodities and inflation-sensitive places are one of those diversifiers.”

$(GCC)$ is up just over 9% year to date. The fund holds a mix of energy, agriculture and metals futures contracts and can own up to 5% in bitcoin futures contracts.

2. Amplify Inflation Fighter ETF $((IWIN)$)

Another firm is taking a hybrid approach in addressing inflation concerns.

Amplify ETFs’ recently launchedInflation Fighter ETF(IWIN) is a mix of inflation-sensitive stocks and commodity futures contracts, Up just over 3% since launch, the ETF has exposure to mining companies, land developers, homebuilders and real estate investment trusts as well as agriculture, gold and bitcoin.

IWIN’s top five holdings are the Grayscale Bitcoin Trust($(GBTC)$), the SPDR Gold MiniShares Trust($(GLDM)$),Invesco’s Optimum Yield Diversified Commodity Strategy No K-1 ETF($(PDBC)$), theTeucrium Corn Fund($(CORN)$) and real estate company $(Rayonier)$.

3. WisdomTree U.S. Quality Dividend Growth Fund (DGRW)

Dividend-based strategies are attracting interest from investors as well.

The WisdomTree U.S. Quality Dividend Growth Fund($(DGRW)$) now has $7 billion in assets backing its forward-looking strategy, which uses quality metrics, return on equity data, return on assets data and earnings growth expectations to determine which companies are likeliest to keep raising their dividends.

Its top holdings are $(Apple)$, $(Johnson & Johnson)$,$( Microsoft)$,$(Procter & Gamble)$ and$( Philip Morris International)$.

It’s been one of the best performers in the large blend category the last three months because of that defensive rotation. It’s top 2% of all large blend funds because of that dividend screen, but good-quality earnings that are supporting that dividend.

4.WisdomTree U.S. Efficient Core Fund ($(NTSX)$)

Specialty ETFs that mix allocation strategies are also gaining steam,.

His firm’s U.S. Efficient Core Fund(NTSX) is approaching $1 billion in assets by offering an actively managed portfolio of U.S. equities and Treasury futures contracts in a leveraged version of the classic 60% stock, 40% bond structure.

The idea is to devote two-thirds of your capital to NTSX’s 60-40-inspired strategy and use the remaining third for diversification and hedging against market risk.

$(NTSX)$ is up nearly 67% since its 2018 launch. WisdomTree debuted international and emerging markets versions of the strategy, NTSI and NTSE, in May 2021.

5.WisdomTree Floating Rate Treasury Fund ($(USFR)$)

For those who don’t want to own fixed-rate bonds in an uncertain environment,WisdomTree’s Floating Rate Treasury Fund(USFR) offers another alternative solution.

Floating-rate Treasurys have the shortest duration of any Treasury securities. First issued by the government in 2014, their rates reset every week instead of being fixed.

The Fed has communicated they’re on a path to hiking rates, During the last rate hike cycle, the floating rate Treasury was the highest-yielding Treasury by the end of the cycle. Our view is that’s going to happen again. So USFR is the way to play the Fed rate hike.

6. Amplify BlackSwan Growth & Treasury Core ETF ($(SWAN)$)

Another Amplify offering aims to strike a balance between risk-off and risk-on assets in case of unpredictable, “black swan” market events.

The firm’s BlackSwan Growth & Treasury Core ETF($(SWAN)$) takes a “barbell approach” to its mission, with roughly 88% in U.S. Treasurys and 11% inSPDR S&P 500 ETF($(SPY)$) or Nasdaq options.

What this allows you to do is get about anywhere from 50%-70% of the return of the relative index, whether that’s the Nasdaq or the S&P, but have considerable always-on hedged exposure to the market

It’s useful in times like the early Covid pandemic stock market collapse, When the S&P dropped 30% over the course of a few days, SWAN fell just 9%.

When market volatility increases, when there is a geopolitical event, investors go risk-off, they focus on U.S. Treasurys, Treasurys that have a negative correlation to the equity market can be an important part of a hedged portfolio exposure should we see disruptive events or black swan events.

Source From CNBC