AThe annual inflation rate in the United States slowed to 8.3% in April from a 41-year high of 8.5% in March, according to Trade Economics, but less than the market forecast for 8, 1%. Energy prices jumped 30.3%, below 32% in March thanks to a moderate rise in gasoline prices (43.6% against 48%) while fuel oil rose further (80.5 % versus 70.1%). In contrast, food prices jumped 9.4%, the maximum since April 1981, and prices also rose faster for housing (5.1% vs 5%) and new vehicles (13.2% vs 12 .5%).
In this context, we suggest a few sector ETFs that may be worth investing in when inflation is rising. Below we highlight them.
The transportation index rose 3.1% in April after rising 2% in March.
iShares US Transportation ETF IYT – Zacks Rank #2 (Buy) fund measures the performance of companies in the industrial transportation, airline, and general industrial services sectors of the US stock market.
New car price inflation was palpable. The new vehicle index rose 1.1% in April after rising 0.2% the previous month. First Trust S-Network Future Vehicles & Technology ETF CARZ can thus play on the rise in car price inflation.
The Zacks Rank #3 (Hold) First Trust SNetwork Future Vehicles & Technology ETF (CARZ) tracks the S-Network Electric & Future Vehicle Ecosystem Index, whose constituents are chosen by selecting eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.
The gas utility index rose 3.1% in April after rising 0.6% in March.
Utilities Select Sector SPDR ETF XLU – The underlying index seeks to provide an effective representation of the utilities sector of the S&P 500 Index.
The out-of-home food index rose 0.6% sequentially in April after rising 0.3% in March. This indicates that restaurants are charging more.
AdvisorShares Restaurant ETF EATZ – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund which seeks to achieve its investment objective by investing at least 80% of its net assets in the securities of companies which derive at least 50% of their net income from Restoration.
Medical care services
The medical care index rose 0.5% sequentially in April after rising 0.6% in March.
iShares US Healthcare Providers ETF IHF – The fund’s underlying Dow Jones US Select HealthCare Providers Index measures the performance of the healthcare provider sub-sector in the US stock market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, retirement homes as well as rehabilitation and retirement centers.
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iShares US Transportation ETF (IYT): ETF Research Reports
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
iShares US Healthcare Providers ETF (IHF): ETF Research Reports
First Trust SNetwork Future Vehicles & Technology ETF (CARZ): ETF Research Reports
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.