“Have an anchor so that life doesn’t toss you around.”
— Debby Ryan, American actress and songwriter
Fast fact: Equity markets are inherently volatile! Of course, you already knew that and telling you seems like an exercise in revealing the obvious. Yet what isn’t obvious is the omnipresent need to construct a volatility-resilient portfolio anchored in stability.
Enter real-asset exchange-traded funds (ETFs). These funds can serve as that anchor, offering exposure to tangible holdings such as real estate, infrastructure and commodities. These funds are one way to provide the grounding that investors look for; when markets become unsteady, the assets in these funds tend to hold their value and don’t get carried away with every current in the sea.
This week’s ETF, the 3EDGE Dynamic Hard Assets ETF (EDGH), is a new real-asset ETF, launched in October 2024. The fund seeks capital appreciation when the market rises and attempts to limit losses in periods of decline. It does this through exposure to dynamic hard assets, which include futures-based commodities such as energy and agriculture, physical assets such as gold and other inflation-protected assets. EDGH invests at least 80% of its assets in securities that offer exposure to these types of hard assets, including derivatives and other ETFs.
This fund is actively managed, meaning it is continuously adjusted to capture opportunities as the real-asset landscape changes. It employs a proprietary model in its investment research process, which combines valuation, economic and investor behavioral factors. A committee then chooses assets believed to be undervalued and poised to positively respond to financial market catalysts. This active structure seeks to capitalize on emerging trends to help investors stay anchored amid the shifting tides of the market.
EDGH’s top eight holdings account for over 99% of its total assets and include Sprott Physical Silver Trust (NYSE: PSLV), 23.54%; iShares 0-5 Year TIPS Bond ETF (NYSEARCA: STIP), 19.28%; WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (CBOE: GDMN), 17.72%; Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (NASDAQ: VTIP), 12.46%; Harbor Commodity All-Weather Strategy ETF (NYSE: HGER), 9.84%; Invesco Agriculture Commodity Strategy No K-1 ETF (NASDAQ: PDBA), 9.81%; PIMCO 1-5 Year U.S. TIPS Index Exchange-Traded Fund (NYSEARCA: STPZ), 6.92% and First American Funds, Inc. – Government Obligations Fund (NASDAQ: FGXXX), 0.43%. The fund has net assets of $145.7 million and an expense ratio of 1.01%.
Chart courtesy of www.stockcharts.com.
EDGH has demonstrated strong performance since its recent launch, as shown in the chart above. It is up 6.08% in the last month, 9.46% in the last three months and 20.7% year to date. Even amid a sharp market downturn in April, the fund did not see any significant decline — a potential sign that its strategy helps anchor performance when volatility surges.
However, don’t just take my word for it. Before choosing any investment, it’s important to make sure it fits your own risk tolerance and strategy for weathering the storms you expect to face in your personal investing journey. Investors should always do their due diligence before adding any stock, fund or ETF to their portfolios.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.
