Some progress has been made in terms of fighting inflation, but likely not enough for most consumers. That’s enough for many advisors and fixed income investors to revisit a familiar stomping ground: Treasury Inflation-Protected Securities (TIPS).
As of one of the largest corners of the Treasury market, TIPS have a slew of dedicated ETFs addressing those bonds. However, there may be better inflation-beating mousetraps in the ETF wrapper than old guard TIPS funds. Enter the WisdomTree Inflation Plus Fund (WTIP).
WTIP, which debuted in June, leverages a multi-asset approach to build on the inflation-fighting properties of traditional TIPS products. The new WisdomTree ETF lives up to its name and ticker by featuring exposure to TIPS. It goes a step further by also including other asset classes known for being inflation fighters. Those include commodity futures, gold, and silver. WTIP even features a modest allocation to bitcoin, the largest digital currency.
WTIP: Flexible Inflation Protection
When it comes to inflation protection, TIPS aren’t the only game in town. Gold checks that box, as do other asset classes. Said another way, investors prioritizing inflation buffering ought to be flexible. WTIP accomplishes that objective.
“What makes WTIP different is how it puts these pieces together. Instead of choosing between them, it builds a base of TIPS and then adds commodity exposure on top, without needing extra capital to do it,” noted Behnood Noei, WisdomTree director of fixed income. “That layered approach means investors can get a broader, more flexible inflation hedge without overcomplicating things. It’s a practical way to prepare for different kinds of inflation in one fund.”
Active Commodities in WTIP
WTIP’s approach to commodities exposure highlights the ETF’s flexibility. Sure, a broad approach to owning commodities can guard against inflation, as can exposures to dedicated gold or silver ETFs. WTIP goes a step further.
“Rather than just buying and holding a basket of commodities, the Fund actively adjusts its positions based on market momentum,” added Noei. “About 80% of its commodity exposure shifts between long and short positions, using a momentum-based approach that looks at what’s gaining or losing strength in real time. It also holds steady positions in gold and silver, two assets that have historically done well when inflation rises.”
Despite recent weakness by bitcoin, the ETF has beaten aggregate bond and broader commodity benchmarks since July. That just adds to the alure of WTIP.
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