Inflation and Currency Protection in Your Portfolio
This just a quick investment tip for you to consider over the weekend. It addresses two problems that will confront your money and your portfolio in the coming months: inflation and devaluation of the dollar.
But this asset class does not protect you from a decline in the dollar. Can you buy something that does both?
Yes you can – the SPDR DB International Government Inflation-Protected Bond ETF (WIP). This exchange traded fund is based on a collection of inflation-indexed bonds issued by foreign governments, including the U.K., France, Sweden, and Brazil. It yields 2.3% with an expense ratio of 0.5%.
Although the WIP fund is down 15% over the past year, it is on the upswing, showing a 6.2% gain YTD. Now could be a great time to get it.
Because it gives you protection against both inflation and currency devaluation, this ETF is something to consider for your overall asset allocation strategy. At the very least, it saves you the trouble and expense of owning both a TIPS fund and a non-hedged foreign currency/bond fund. The major downside compared to owning TIPS, for example, is that you do not have principal protection.
I like the concept myself. What do you think?
Photo credit: Bradipo