Merk Launches Stagflation Themed ETF

Merk Investments is making its first solo foray into the U.S. ETF market with a fund that aims to benefit from “stagflation,” or the quandary of an economy that simultaneously experiences high inflation and sluggish growth. 

The Merk Stagflation ETF (STGF) debuted on the NYSE Arca on Wednesday with an expense ratio of 0.45%. 

STGF follows a Solactive index that holds 55-85% of assets in the Schwab U.S. TIPS ETF (SCHP) and 5-15% of its assets each in the Vanguard Real Estate ETF (VNQ), the VanEck Merk Gold Trust (OUNZ) and the Invesco DB Oil Fund (DBO) based on respective price moves. 

The San Francisco-based Merk operates the OUNZ trust, while VanEck manages marketing for the $668.6 million fund. 

STGF comes as a combination of decades-high inflation, a hawkish Fed and broader macroeconomic issues like shutdowns in China and the war in Ukraine have sent shivers down markets that are trying to assess the real economy’s post-pandemic recovery. 

The fund’s debut also covers the three main phenomena describing monetary policy gone awry. Several ETFs on the market target inflation, such as the VanEck Inflation Allocation ETF (RAAX) and the AXS Astoria Inflation Sensitive ETF (PPI), while the KraneShares Quadratic Deflation ETF (BNDD) is the lone fund on U.S. exchanges that specifically targets deflation beneficiaries by holding Treasurys and options that would benefit in a long-term flattening yield curve. 

Contact Dan Mika at [email protected], and follow him on Twitter