(Bloomberg) — Investors may soon have an ETF to weather one of the worst possible outcomes for the U.S. economy: surging inflation coupled with stagnant economic growth.
The Merk Stagflation ETF would be passively managed and track an index of so-called “stagflation-sensitive” asset classes, according to a Securities and Exchange Commission filing Wednesday. If approved by regulators, the fund would hold 55%-85% U.S. Treasury Inflation-Protected Securities and between 5%-15% real estate, gold and oil.
Fears about stagflation — a toxic mix of rising costs, falling employment and slow growth — have stalked markets for months as consumer prices rise at the fastest pace in four decades and the Federal Reserve moves closer to raising interest rates to cool the pace of growth.
Few expect that to be the likely outcome, especially with Fed Chair Jerome Powell saying he’ll take a nimble approach to monetary policy and some price pressures expected to ease as supply chains roiled by the pandemic are repaired.
But elevated producer prices are a sign that concerns about stagflation could flare up again, according to Miller Tabak + Co.’s Matt Maley.
“There’s no question that stagflation concerns have eased in recent months, but I worry that they’ll rise again in the coming months. Therefore, a stagflation ETF could gain a lot of interest,” said Maley, the firm’s chief market strategist, who isn’t involved with the ETF. “Higher inflation and lower profit margins will likely raise concerns about stagflation before long.”
The ticker and management fees for the ETF are not yet listed.
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