These 2 ASX ETFs could help your portfolio crush inflation

As we continue into 2022, one theme that is certainly emerging as a dominant one this year is that of inflation. With hefty inflation numbers now coming out of Australia, the US and many other countries around the world, investors have been fretting over protecting their wealth from inflation’s corrosive effects. That is arguably one of the reasons we have seen such volatility across global markets over the past month or two.

So how does one protect a share portfolio from inflation? Here are two ASX exchange-traded funds (ETFs) that arguably have inflationary protections built into them.

2 ASX ETFs that could help fight off inflation

BetaShares Global Energy Companies ETF (ASX: FUEL)

This ETF from BetaShares represents a basket of global shares from the energy sector. Over 90% of its (current) 42 holdings are involved in oil and gas. Integrated companies, as well as exploration, refining, equipment and transportation companies, are present here.

Energy is arguably an inflation-resistant industry since it is such an inelastic and essential input into every economic industry. We all need energy and, as such, most of us are forced to pay whatever the going rate for electricity, petrol, diesel, or gas may be. That makes the companies that produce and sell energy arguably useful to own in an inflationary environment.

Some of FUEL’s top holdings include Exxon Mobil Corp (NYSE: XOM), Chevron Corporation (NYSE: CVX), and BP plc (LON: BP).

The BetaShares Global Energy Companies ETF charges a management fee of 0.57% per annum. It has returned an average of 1.44% per annum since its inception in 2016. It offers a trailing dividend distribution yield of 4%.

BetaShares Global Banks ETF (ASX: BNKS)

As you might imagine, this ETF is similar in nature to our previous option. But this one only invests in bank shares. BNKS currently has 59 underlying shares in its portfolio. These are spread across the United States, Canada, Britain, China, Japan, Singapore, and Europe (no ASX banks though).

Because a bank is so heavily influenced by interest rates, it arguably has an inflation hedge built in. A bank will almost always keep its interest rates (both on debt and on credit) ahead of the official cash interest rate set by the central bank. And because central banks usually adjust cash rates in accordance with inflation, they can be resistant to its wealth-eroding effects.

Some of BNKS’ top holdings include Bank of America Corp (NYSE: BAC), Wells Fargo & Co (NYSE: WFC), JPMorgan Chase & Co (NYSE: JPM), and Royal Bank of Canada (TSE: RY).

The BetaShares Global Banks ETF charges a management fee of 0.57% per annum. It offers a trailing dividend distribution yield of 3.6%.

The post These 2 ASX ETFs could help your portfolio crush inflation appeared first on The Motley Fool Australia.

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• When to buy into new ASX listings. Hint: not during an IPO
• Here’s why the Renascor (ASX:RNU) share price is rocketing 19% today

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen owns JPMorgan Chase. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BetaShares Global Energy Companies ETF – Currency Hedged. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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