While the major stock indexes hover near their all-time highs, rising inflation could keep the overall market under pressure in the near term. So, it could be wise to bet on ETFs such as the Vanguard Real Estate Index Fund ETF (VNQ), iShares TIPS Bond ETF (TIP), and Invesco DWA Basic Materials Momentum ETF (PYZ) as they are expected to continue gaining even if inflation persists.While solid second-quarter corporate earnings reports helped the major stock indexes soar, the market has been volatile lately due to a resurgence of COVID-19 cases and an inflationary environment. At the Jackson Hole economic symposium, Federal Reserve Chair Jerome Powell reiterated that high inflation is ‘temporary.’
However, the inflation rate for the 12 months that ended July came in at 4.2%, the highest rate since the first Gulf War in 1991. Moreover, according to the Labor Department data, the consumer price index (CPI) rose 5.4% in July, representing the largest jump since August 2008. Also, the producer price inflation (PPI) rose 7.8% for the 12 months that ended July, higher than economists’ expectations. While high inflation poses a threat for some industries, several industries are less susceptible to the consequences and benefit from rising inflation.
Therefore, it could be wise to invest in quality ETFs Vanguard Real Estate Index Fund ETF Shares (VNQ), iShares TIPS Bond ETF (TIP), and Invesco DWA Basic Materials Momentum ETF (PYZ) that are less susceptible to the consequences of high inflation.