Bolster your portfolio for hot inflation with these ETFs, Bank of America says
Stubborn inflation continues to hang over the economy, but investors can shore up their portfolios to guard against the ill effect of higher prices, according to Bank of America. Two data releases this week showed that inflation still has a long way to go before it reaches the Federal Reserve’s 2% goal. The consumer price index rose 0.6% in April, bringing the one-year rate to 3.8% — the highest since May 2023. Wholesale inflation grew 1.4% last month, or 6% on an annual basis — its fastest gain since December 2022. That pickup in prices requires investors to rethink their asset allocations, Bank of America investment and ETF strategist Jared Woodard wrote in a Wednesday note. “In the 2000-2019 era of low inflation, rapid globalization, deflationary tech, and peak demographics, all investors needed was ‘US tech & Treasuries,'” he wrote. “Today, the urgent task for asset allocators is to prepare for inflationary boom and stagflationary bust scenarios.” Woodard and his team of strategists highlighted a couple of trade ideas that are expected to benefit from inflation. Real assets Commodities have been a winning play for investors, with copper surging to a record close this week and oil prices remaining elevated amid the Iran war. The Bank of America strategists have taken a shine to stock ETFs in metals and mining, as well as master limited partnerships, noting that they are trading below long-term average valuations. Plays that Woodard’s team highlighted in this space include the iShares U.S. Basic Materials ETF (IYM) , up more than 20% year to date and with an expense ratio of 0.38%. Constituents in the fund include Freeport McMoran , Nucor and Newmont , all ahead double-digits in 2026. The Tortoise North American Pipeline ETF (TPYP) is the bank’s MLP play, up nearly 23% year to date and with an expense ratio of 0.4%. Names in the ETF include TC Energy , Enbridge and The Williams Cos. The fund also pays a dividend, offering a current yield of about 3.2%. Finally, nuclear power is on the bank’s radar. “Our commodities team forecasts uranium prices to reach $135 in 2027, challenging the all-time high,” the strategists wrote, noting that investors are seeing rallies as a confirmation to add to their buy-and-hold positions. Bank of America highlighted Global X Uranium ETF (URA) as a play on the theme. The fund is up 22% this year and counts Oklo and Uranium Energy among its constituents. It has an expense ratio of 0.69% and a current dividend yield of nearly 4%. Small cap value The strategists touted U.S. small cap value stocks as one of the least expensive trades, even after returning 15% to 17% year to date. The team also recommends international small cap value, calling out the Avantis International Small Cap Value ETF (AVDV) , up 17% in 2026 with an expense ratio of 0.36%. The iShares US Small Cap Value Factor ETF (SVAL) was also on Bank of America’s list, up 14% this year with an expense ratio of 0.20%. CNBC’s Michael Bloom contributed reporting.
