Inflation sets new records, there is still time to add exposure to real assets

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US inflation continued to climb to its highest rate in 40 years, wiping out earlier hopes that inflation had peaked in April.

The headline consumer price index (CPI) has climbed 8.6% over the past year, prompting the US Federal Reserve to tighten policy further in an effort to restore price stability.

The CPI rose 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the US Bureau of Labor Statistics reported on Friday. The increase was broad-based, with the housing, gasoline and food indexes being the main contributors. After declining in April, the energy index rose 3.9% during the month, with the gasoline index rising 4.1% and the other major component indices also rising. The food index rose 1.2% in May, while the home food index rose 1.4%.

The all-items index, which rose 8.6% for the 12 months ending in May, marks the largest 12-month increase since the period ending in December 1981. The energy index rose by 34.6% over the past year, the largest 12-month increase since the period ending in September 2005. The food index increased by 10.1% for the 12 months ending in May, the first increase of 10% or more since the period ending in March 1981, reported the United States Bureau of Labor Statistics.

Real assets are a great way to augment a portfolio for better support during times of inflation.

The FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) is a unique product in the ETFdb category of commodity stocks. GUNR is focused on the “upstream” part of the natural resources supply chain, maintaining significant exposure to the water and timber industries as well as positions in companies engaged in power generation , metal mining and agriculture, according to VettaFi.

The highly liquid fund has $8.9 billion in assets under management and charges an expense ratio of 46 basis points.

GUNR includes many well-known stocks, including Exxon Mobil, Chevron Corporation, ConocoPhillips and Tyson Foods. Although it offers some exposure to mid-cap stocks, it is heavily biased towards large and mega-cap stocks, including major oil companies and major mining companies.

With 112 individual constituents, GUNR offers relatively deep exposure to the global commodities sector. The fund offers exposure to North, Central and South America (54.12%), Europe (33.36%) and Asia-Pacific (12.52%). Within this, US equities make up 37.49% of the fund, followed by Canada and the UK at 12.82% and 12.71%, respectively.

GUNR can be used in several different ways. Investors looking to add exposure to commodity-intensive stocks might find this fund a valuable addition to a long-term buy-and-hold portfolio. It can also be an effective way to establish more tactical short-term exposure to the commodities industry.

For more news, insights and strategy visit the Multi-asset channel.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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