ETF Strategies To Hedge Against Inflation & Rising Rates

My first guest is Nancy Davis, founder & CIO of Quadratic Capital Management. Nancy manages the Quadratic Interest Rate Volatility & Inflation Hedge ETF (IVOL - Free Report), In the second part, I’m joined by Dean Smith, Portfolio Manager of the FolioBeyond Rising Rate ETF (RISR - Free Report).

Inflation is at a 40-year high now and has reinforced pressure on the Fed to raise rates aggressively. Disruptions caused by the war and financial sanctions on Russia are likely to keep energy, metal, and food prices high.

The market now expects a 50 basis-point rate increase at the Fed’s May meeting, followed by a series of rate hikes over the coming months. It remains to be seen if the central bank can manage a “soft landing” and avoid a sharp economic contraction.

IVOL, which made its debut in May 2019, has gathered over $1.7 billion in assets. The actively managed fund seeks to hedge relative interest rate movements, and to benefit from market stress when fixed-income volatility increases, while providing the potential for enhanced, inflation-protected income.

RISR is an actively managed ETF that seeks to provide protection against rising interest rates. It invests primarily in interest-only mortgage-backed securities and U.S. Treasury bonds. The ETF, which launched in September 2021, has already gathered $46 million in assets. It is up over 30% this year.

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