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Investors turn to ETFs to hedge against inflation

Investors turn to ETFs to hedge against inflation
EVG culture via Pexels

Investors have been piling more money into exchange-traded funds and exchange-traded products across the world as inflation hikes start to bite.

According to the latest data from research consultancy ETFGI, there has been a record level of assets and net inflows in Active ETFs and ETPs world-wide of US$418bn and US$110bn (£302bn and £79.5bn) respectively as at the end of September.  

The data revealed that assets invested in actively managed ETFs/ETPs finished the month up 1.1 per cent, with a record year-to-date increase in assets of 46.1 per cent.

September marked the 18th month of consecutive net inflows.

Deborah Fuhr, managing partner, founder and owner of ETFGI, said this was partly a response to fears over the US and worries over rising inflation.

She said: "The S&P 500 declined 4.65 per cent in September due to fears of inflation, the ongoing Congressional budget impasse, and anticipation of a reduction in Fed liquidity provision."

Developed markets ex-US declined 2.99 per cent and emerging markets were down 3.12 per cent in September.

The ETFGI said substantial inflows to the end of September could be attributed to the top 20 active ETFs/ETPs by net new assets, which collectively gathered $12.35bn (£8.94bn) during September.

The Dimensional World ex-US Core Equity 2 ETF (DFAX US) gathered $4.71bn (£3.41bn), marking the largest individual net inflow into a fund.