Hedging the Different Types of Inflation - Animal Spirits Podcast
June 29, 2022
Listen to Harbor’s Kristof Gleich, President & CIO, and Don Casturo, Founding Partner and CIO of Quantix Commodities, talk to Animal Spirits hosts Michael Batnick and Ben Carlson about how to hedge inflation with commodities.
Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. The ETF is new and has limited operating history to judge.
Shares are bought and sold at market price not net asset value (NAV). Market price returns are based upon the closing composite market price and do not represent the returns you would receive if you traded shares at other times.
A diversified individual portfolio does not assure a profit.
There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. A non-diversified Fund may invest a greater percentage of its assets in securities of a single issuer, and/or invest in a relatively small number of issuers, it is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio.
Commodity Risk: The Fund has exposure to commodities through its and/or the Subsidiary’s investments in commodity-linked derivative instruments. Authorized Participant Concentration/Trading Risk: Only authorized participants (“APs”) may engage in creation or redemption transactions directly with the Fund. Commodity-Linked Derivatives Risk: The Fund’s investments in commodity-linked derivative instruments (either directly or through the Subsidiary) and the tracking of an Index comprised of commodity futures may subject the Fund to significantly greater volatility than investments in traditional securities.
The S&P GSCI is a composite index of commodities that measures the performance of the commodities market. The index often serves as a benchmark for commodities investments.
The Bloomberg Commodity Index is a broadly diversified commodity price index distributed by Bloomberg Index Services Limited.
The Quantix Inflation Index is calculated on a total return basis, which combines the returns of the futures contracts with the returns on cash collateral invested in 13-week U.S. Treasury Bills. This unmanaged index does not reflect fees and expenses and is not available for direct investment. The Quantix Inflation Index was developed by Quantix Commodities LP and is owned by Quantix Commodities Indices LLC.
Indices listed are unmanaged and do not reflect fees and expenses and are not available for direct investment.
Note about tax-efficiency: ETFs are subject to capital gains tax and taxation of dividend income. However, ETFs are structured in such a manner that taxes are generally minimized for the holder of the ETF. An ETF manager accommodates investment
inflows and outflows by creating or redeeming “creation units,” which are baskets of assets. As a result, the investor usually is not exposed to capital gains on any individual security in the underlying portfolio. However, capital gains tax may be incurred by the investor after the ETF is sold.
The views expressed herein are those of the speaker as of June 6, 2022 and are subject to change without notice. Foreside Funds Services and Harbor Capital Advisors are not affiliated with Ritholtz Wealth Management or Animal Spirits.
A “60/40 portfolio” is guidepost portfolio for a moderate risk investor. Portfolio allocations of 60% to equities to seek capital appreciation and 40% allocation to fixed income help mitigate risk and offer potential income. Stock markets are volatile and
equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. Fixed income investments are affected by interest rate changes and the creditworthiness of the issues held. As interest rates rise, the values of fixed income securities are likely to decrease and reduce the value of a portfolio.
A capital expenditure (Capex) is money invested by a company to acquire or upgrade fixed, physical, non-consumable assets, such as a building, a computer or a new business.
The term cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a company. Cash received represents inflows, while money spent represents outflows. A company’s ability to create value for shareholders is fundamentally determined by its ability to generate positive cash flows.
Harbor All-Weather Inflation Focus ETF Top Ten Holdings can be found here.
Quantix Commodities LP ("Quantix") is a third-party subadvisor to the Harbor All-Weather Inflation Focus ETF.