Inflation Is Soaring Again, and This Under-the-Radar ETF Is About to Run

"HGER tracks the Quantix Commodities Index, a rules-based benchmark that rotates exposure between scarcity and debasement regimes. The index asks which commodities are most exposed to whatever flavor of inflation is currently running, then leans into them. Collateral sits in short-dated Treasury bills, which is where the 5.3% dividend yield comes from. As of recent filings the fund carries a heavy gold tilt at roughly 41%, with the rest spread across energy and other inflation-sensitive commodities."

"That structure matters because static commodity indices weight by production volume, which means they own a lot of things that may not be doing the inflation work in any given cycle. Quantix tries to own the commodities that are driving the current inflation. When monetary debasement dominates, gold gets the nod. When energy is the marginal driver, crude moves up the stack."

"Headline PCE jumped from 2.8% in February to 3.5% in March, with the energy component spiking 12% month over month. WTI crude went from $60 a barrel in January to $100 in April. HGER caught that move cleanly. The fund is up 35% year to date and trades near $33."

"Compare that to iShares TIPS Bond ETF ( NYSEARCA:TIP | TIP Price Prediction), the default inflation hedge in most 60/40 portfolios. TIP returned 2% year to date and 6% over one year. TIPS adjust principal for CPI, but the duration baked into a TIPS fund eats most of the inflation accrual when"

April inflation reached 3.8% and energy prices rose sharply. Harbor Commodity All-Weather Strategy ETF (HGER) returned 51% over the past year, while a typical TIPS ETF returned about a fifth of that. HGER tracks a rules-based Quantix Commodities Index that rotates exposure between scarcity and debasement regimes based on which commodities best match the prevailing inflation driver. The fund holds collateral in short-dated Treasury bills, contributing to a 5.3% dividend yield. Recent filings show a large gold allocation around 41%, with remaining exposure spread across energy and other inflation-sensitive commodities. Energy-led inflation coincided with crude rising from about $60 to $100 per barrel, and HGER rose strongly, while TIPS returns were limited by duration effects.

Read at 24/7 Wall St.