Exchange Traded Funds (ETFs)

Hedge Against Inflation with This Multi-Asset ETF

The SPDR SSgA Multi-Asset Real Return ETF (NYSEARCA:RLY) is an actively managed fund that attempts to hedge against inflation by investing in other funds with exposure to real estate, commodities, Treasury Inflation-Protected Securities (TIPS) and natural resources companies.

RLY seeks to achieve real return consisting of capital appreciation and current income. The fund invests in exchange-traded funds (ETFs) registered under the Investment Company Act of 1940, as amended, to track the performance of a market index, exchange traded commodity trusts and exchange-traded notes (ETNs).

The fund’s portfolio may invest in certain exchanged-traded products that pay fees to the fund adviser and its affiliates for management, marketing or other services. RLY provides exposure to inflation-protected securities issued domestically and internationally, domestic and international real estate securities, commodities and publicly traded companies in natural resources and/or commodity businesses.

These companies may include agriculture, energy, metals and mining companies. The fund’s investment process relies on a proprietary quantitative model, as well as the adviser’s fundamental views regarding factors that may not be captured by the quantitative model.

Chart courtesy of StockCharts.com

While a low fee and strong investor interest help to make the case for RLY, performance has been somewhat disappointing in recent years. Over the past year, as you can see in the chart above, RLY was hit hard by the pandemic, but quickly recovered and climbed to new highs. However, please conduct your own due diligence in deciding whether or not this fund fits your own individual portfolio and investing goals.

Unlike some of its peers, RLY has attracted sufficient assets and liquidity since its April 2012 launch to signal long-term viability. Investors might be enticed by the relatively low fee, or perhaps they like RLY’s value proposition returns above the rate of inflation.

The fund’s allocations — made easier to grasp by an ETF-of-ETFs structure — are consistent with this goal. RLY holds TIPS, but it also has direct and indirect exposure to commodities, including a huge stake in a global natural resources ETF (GNR) and real estate exposure via real estate investment trust (REIT) ETFs.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.