5 Sector ETFs to Win from a 8%+ U.S. Inflation

Posted by admin on May 12th, 2022

Annual inflation rate in the United States slowed to 8.3% in April from a 41-year high of 8.5% in March, per tradingeconomics, but less than market forecasts of 8.1%. Energy prices surged 30.3%, below 32% in March thanks to a moderate rise in gasoline prices (43.6% versus 48%) while fuel oil increased more (80.5% versus 70.1%). On the other hand, food prices jumped 9.4%, the maximum since April 1981 and prices also rose faster for shelter (5.1% vs 5%) and new vehicles (13.2% vs 12.5%).

Against this backdrop, we suggest a few sector ETFs that can be worth investing at the time of rising inflation. Below we highlight those.

Transportation Services

The index for transportation increased 3.1% in April after a 2% uptick in March.

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iShares U.S. Transportation ETF IYT – The Zacks Rank #2 (Buy) fund measures the performance of companies from the Industrial Transportation, Airline and General Industrial Services industries of the U.S. equity market.

Auto

The price inflation of new cars has been palpable. The index for new vehicles increased 1.1% in April after rising 0.2% the previous month. First Trust S-Network Future Vehicles & Technology ETF CARZ can thus be played on the uptick in car price inflation.

The Zacks Rank #3 (Hold) First Trust SNetwork Future Vehicles & Technology ETF (CARZ) follows the S-Network Electric & Future Vehicle Ecosystem Index, which constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.

Utilities

The index for utility gas service increased 3.1% in April after a rise of 0.6% in March.

Utilities Select Sector SPDR ETF XLU – The underlying index seeks to provide an effective representation of the Utilities sector of the S&P 500 Index.

Restaurants

The food away from home index rose 0.6% sequentially in April after rising 0.3% in March. This points to the fact that restaurants are charging higher.

AdvisorShares Restaurant ETF EATZ – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.