Hedge Against Inflation with This Multi-Asset ETF

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

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.

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