3 ETFs to Hedge Inflation

Inflation may not be an issue if you listen to the government and their numbers. But as the person in my household that pays the bills and does the grocery shopping I know there is inflation already living among us.

Not only is there inflation now in the price of energy (see gas prices) and food (see milk prices), but it is clear that prices overall have been increasing. The big concern in the coming years is that inflation finally starts to hit at the level the government measures and that will hit our wallets even harder.

There are a number of different angles investors can take to prepare their portfolios for higher inflation in the future. They range from inflation-protected bonds to gold to timber. I have a sizable list of inflation hedges and today I will share 3 ETFs that fit the bill.

• PowerShares Senior Loan Portfolio ETF ($BKLN) - A basket of loans offered by banks to companies that are often rated below investment grade. This allows for a solid dividend (currently 4%) and because they are floating instruments it will not be hurt nearly as bad by rising interest rates.
• Guggenheim ABC High Dividend ETF ($ABCS) - The ETF invests in 3 commodity-rich countries (Australia, Brazil, and Canada) and chooses 30 of the highest yielding companies. This is an inflation play as typically commodity stocks will outperform during inflationary periods. And add in the 6.7% dividend the ETF currently pays it only increases the reward potential.
• iShares S&P Global Timber & Forestry ETF ($WOOD) - The timber/forestry/land stocks have historically done well during inflationary times and this basket of 27 stocks will give investors exposure to that sector. Additionally the sector should do well when the overall economy and market is moving upward as it is now.