Not all prices rise in unison.
A startling rise in food prices this year has stoked inflation fears. While, by definition, inflation is a rise in prices, not all prices rise at the same rate. The price of physical goods such as agriculture and other commodities often rises fastest in inflationary periods. The following ETFs may benefit from an inflation surprise, as they either hold physical commodities or invest in companies that deal in physical commodities:
- The PowerShares DB Agriculture ETF (DBA | B-39) holds futures contracts on a range of agricultural commodities including wheat, corn, sugar, coffee, cattle, hogs and soybeans.
- The iShares Gold Trust ETF (IAU | A-99) holds gold stored in vaults in New York and is considered a hedge against inflation.
- The iShares TIPS Bond ETF (TIP | A-99) holds U.S. Treasury inflation-protected securities.
- The iShares U.S. Oil & Gas Exploration & Production ETF (IEO | A-76) holds equity positions in companies in the U.S. oil and gas exploration and production space.
- The PowerShares DB Energy ETF (DBE | B-85) holds futures contracts on crude oil, natural gas, gasoline and heating oil.
- The iShares Global Timber & Forestry ETF (WOOD | B-23) holds equity stakes in the 25 largest public companies that own or manage forests and timberlands.