Best ETFs For High Inflation And Rising Rates

In this episode of ETF Spotlight, I speak with Chris Huemmer, senior investment strategist for FlexShares ETFs at Northern Trust Asset Management, about investing in the current market environment.

Per Flex Shares research, value, quality, and dividend yield look attractive in rising rate environments due to their shorter “duration”. These factors significantly outperformed the broader equity indexes during the past four Fed rate hike cycles.

Take a look at ETFs like the FlexShares US Quality Large Cap ETF (QLC - Free Report), the FlexShares US Quality Low Volatility ETF (QLV - Free Report), and the FlexShares Quality Dividend ETF (QDF - Free Report),

Apple (AAPL - Free Report), Microsoft (MSFT - Free Report), and Johnson & Johnson (JNJ - Free Report) are among the top holdings in these ETFs.

Inflation is now running at its highest levels in four decades and is one of the biggest concerns for investors. Chris recommends natural resources such as oil & gas, precious metals, and timber to protect against inflation and diversify equity-focused portfolios.

In fact, natural resources provided the best annual returns of the major asset classes during the past four Fed rate hiking episodes. Infrastructure, including areas like cellular towers, broadband networks, and healthcare facilities, could also provide some protection against inflation.

The FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) has seen a lot of investor interest lately as it is up about 14% year-to-date. The FlexShares STOXX Global Broad Infrastructure ETF (NFRA - Free Report) is also worth a look.

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