ETFs For Today

Mockup, Typewriter, Word, Money, Wall Street, Etf

Image Source: Pixabay

This year’s articles have covered inflation, rising rates, and the change in Fed policy. All of those factors have implications for investors. Fortunately, there are attractive ETFs for nearly every investment environment. Here are some ideas.

 As soon as we entered 2022 investors began shifting out of growth stocks, especially those that aren’t making money, to large-cap dividend-paying companies. Even better if the companies have a history of raising dividends.

The ProShares S&P 500 Dividend Aristocrats (NOBL) holds S&P 500 companies that have paid and raised their dividend for at least 25 consecutive years. This fund is correlated to but is less volatile than the S&P 500. It has an expense ratio of 0.35%. If inflation continues to rise then so will commodities. That’s why money is flowing into commodity ETFs. The problem is that most commodity ETFs issue a K-1 to report income. Come tax time that would be a hassle. That’s why I’m in the Aberdeen Standard Bloomberg All Commodity Strategy K-1 Free (BCI). Its expense ratio is 0.31%.

Emerging markets countries are typically commodity-heavy and will benefit from rising prices. That’s why emerging market ETFs should outperform our market. China is a commodity importer so I’m favoring ETFs that exclude China. My choice is iShares MSCI Emerging Markets ex-China (EMXC). Its expense ratio is 0.25%. Business Development Companies (BDCs) make loans to small and mid-sized companies. Their loans are mostly floating rate while their liabilities are fixed so they can benefit from rising rates. They are also sensitive to the economy, so if Covid is going to fade then that will be a tailwind. The ETF of choice is VanEck BDC Income (BIZD). This ETF yields 7.8% and has an expense ratio of 0.4%. Rising rates are bad for fixed-income vehicles. That’s why most bond funds have lost money so far this year.

To offset some of the risk of rising rates look to ProShares Investment Grade Interest Rate Hedge (IGHG). This fund owns investment-grade bonds while holding short positions in Treasury bonds. It yields 2.5% and has an expense ratio of 0.3%. Bank loan funds invest in loans made by banks to corporations, most of which are unrated and “float,” so their interest rate resets every few months. As interest rates rise so should the yield on these funds. My choice is SPDR Blackstone/GSO Senior Loan (SRLN). It yields 4.4% and has an expense ratio of 0.70%.

The “buy anything” bull market is over. To fight inflation the Fed is transitioning from an easy money policy to a rising interest rate policy. For now, that is a headwind for stocks and fixed income. But those who choose to sit on the sideline will have a guaranteed after-inflation loss. No thanks. Instead, investors should consider some of the ETFs in this article

Disclaimer: David Vomund is an independent investment advisor. Information is found at or by calling 775-832-8555. Clients hold ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.