State Street Multi-Asset Real Return ETF

RLY

Market cap $1.2B

With global macroeconomic pressures not abating any time soon, and inflation signals coming in higher than expected, many advisors and investors are seeking guidance on how to amplify inflation protection within their portfolio.

With the U.S. economy grappling with persistent energy shocks and rising electricity costs, inflation expectations for the next five years have climbed to their highest levels in four years. For financial advisors, the challenge is shielding client portfolios from eroding purchasing power.

Given all the ongoing uncertainty over the trajectory of both inflation and the Federal Reserve's rate-cutting regimen, advisors and investors were keen to see what the latest CPI report brought in.  February's CPI report came out on Wednesday, March 11, showing that the index grew from 0.3% from last month's numbers and 2.

The State Street SPDR SSGA Multi-Asset Real Return ETF targets real returns above inflation via active allocation across inflation-linked assets, real estate, commodities, and infrastructure. RLY's portfolio is currently heavily weighted in equities related to natural resources and infrastructure, offering strong value characteristics. RLY has reached its objective to outperform inflation in total return since 2012 but has lagged 60/40 and permanent portfolios.

The “debasement trade” has been a persistent investment theme this year as the market translates trade disputes, fiscal deficits, rate policy, and geopolitical tension into a negative outlook for the fiat world, and more specifically, the U.S. dollar.

Bet on defensive and high-earnings growth sectors in this tumultuous April.

The S&P 500 has been under pressure due to trade tensions. These ETFs look trade-proof.

Asset allocation is still important despite recent performance trends. SPDR® SSgA Multi-Asset Real Return ETF offers a mix of asset class exposure for real returns. The RLY ETF focuses on inflation-protected securities, real estate securities, commodities, and infrastructure companies.

RLY is a small fund with exposure to commodities and infrastructure companies, plus other inflation-protected securities. The ETF lacks the diversification benefits of RPAR and is more focused on assets that perform well during periods of inflation.

SPDR® SSgA Multi-Asset Real Return ETF is an actively managed fund of funds aiming at excess return over inflation. The RLY fund provides exposure to inflation-protected securities, real estate securities, commodities, infrastructure companies, and natural resources and commodity businesses. Performance and risk metrics since 2012 are underwhelming, but RLY has outperformed other multi-asset ETFs in the inflationary environment of the last 3 years.