Investing

Best stocks/ETF to perform well during inflation

  • Last Updated:
  • May 19th, 2021 5:13 pm
[OP]
Newbie
Nov 12, 2016
70 posts
30 upvotes

Best stocks/ETF to perform well during inflation

Hi All,

What do you think is the best sector/etfs/stocks to perform well during the upcoming inflation ??! Anything other than Technology.
New investor here trying to learn.

Thanks
18 replies
Sr. Member
Jun 2, 2020
646 posts
600 upvotes
V5y1v1
You could just go with INFL for a nice basket of commodity producers and maybe a little bit of PFIX to cover off long term interest increases and call it a day if you want easy. A lot of us around here are putting money into XBM or XGD for similar reasons.
Deal Guru
Dec 5, 2006
10673 posts
5680 upvotes
Markham
PaddyM77101 wrote: You could just go with INFL for a nice basket of commodity producers and maybe a little bit of PFIX to cover off long term interest increases and call it a day if you want easy. A lot of us around here are putting money into XBM or XGD for similar reasons.
Don't hit me too hard :)

What made me unease on those ETF is their price tie to commodities manufacturing companies stock price instead of commodity prices. So it could be commodities are doing well but not ETF performance. One example is semiconductor ETF "SMH". Chips is shortage everywhere but those semiconductor companies stocks are just ok now
Deal Addict
Dec 4, 2011
1867 posts
1471 upvotes
Montréal
You may want to have a look at DBA and DBC then
Deal Guru
Dec 5, 2006
10673 posts
5680 upvotes
Markham
admiralackbar wrote: You may want to have a look at DBA and DBC then
Both look interesting. Thanks for recommendations
Sr. Member
Jun 2, 2020
646 posts
600 upvotes
V5y1v1
smartie wrote: Don't hit me too hard :)

What made me unease on those ETF is their price tie to commodities manufacturing companies stock price instead of commodity prices. So it could be commodities are doing well but not ETF performance. One example is semiconductor ETF "SMH". Chips is shortage everywhere but those semiconductor companies stocks are just ok now


I see what you're saying but you're also cherry picking an example, if you look at many of the other commodity producers they *generally* track the commodities themselves. That's why I personally like diversifying.

As someone who is holding a lot of DBC and DBA calls you should watch out for negative roll yield in these etfs - many commodity etfs (except for some physical metals etfs off the top of my head) don't actually hold the commodities but instead hold commodities futures and roll them month to month. With this sort of etf you are very vulnerable to contango and backwardation. It makes these sort of products poor long term holds because they are prone to unusual events (like USO a few months ago) or slow degradation.

Another option to consider is IVOL which should also preform well in inflationary environments.

good luck
Deal Addict
Dec 4, 2011
1867 posts
1471 upvotes
Montréal
Thank you for mentioning the risks on those two, I should have mentioned it.
Deal Addict
Nov 13, 2013
2893 posts
1604 upvotes
Ottawa
You can add REITs to this list. Probably a mix of apartments, office and shopping malls. The latter two could be hit by WFH and online shopping but that actually makes them decent value right now. They are a bit of a hassle in non-registered accounts as they have several kinds of income you need to track so small holdings maybe better in registered accounts.

If you have a decently large portfolio you might want to buy commodity producer stocks rather than ETFs or DBA DBC etc. I prefer Canadian stocks. I've done well with Teck and if we are starting a commodity super cycle it has a lot more room to run. Same for Nutiren. Further afield BHP and Glencore are big and diversified. Lots of choices really at that point. Even if I buy individual stocks I don't try to guess who is better managed or whatever just try and diversify and ride the sector up.
Deal Addict
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Oct 7, 2012
1662 posts
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Montreal
Of...just wait till microsoft, apple and google to super low and scoop 'em up?
Deal Addict
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Mar 16, 2010
3292 posts
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Energy, materials, industrials
Deal Addict
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Oct 7, 2012
1662 posts
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Montreal
Dpack22 wrote: Energy, materials, industrials
Is there an etf that is being built to invest in during these times re the picks you wrote?
Penalty Box
User avatar
Dec 16, 2015
2805 posts
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Toronto
Playboy stock
To the moon
Deal Addict
Jul 23, 2007
4478 posts
3064 upvotes
In his recent annual meeting Buffett mentioned Berkshire's BNSF may do well in inflationary times along with See's Candy.

One in the industrials and the other in the consumer staples sector.

So that's two right there.

Perhaps that will translate into the TSX as well, but I'll just have to wait and see. Anything on my watch list in any market environment that's goes down in value is fair game to add to.
[OP]
Newbie
Nov 12, 2016
70 posts
30 upvotes
Stryker wrote: In his recent annual meeting Buffett mentioned Berkshire's BNSF may do well in inflationary times along with See's Candy.

One in the industrials and the other in the consumer staples sector.

So that's two right there.

Perhaps that will translate into the TSX as well, but I'll just have to wait and see. Anything on my watch list in any market environment that's goes down in value is fair game to add to.
What is your thoughts on ZIN etf ??!
Deal Addict
Jul 23, 2007
4478 posts
3064 upvotes
Ahmednasha2y wrote: What is your thoughts on ZIN etf ??!
Sorry I know nothing about ZIN except it's a sector ETF.

I only own individual Canadian companies within their various sectors in a taxable account. Some stocks and sectors in this portfolio will do well during inflation, others will not, but which ones I'll only know for sure if and when it actually happens.

The markets are always full of surprises.

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