Building a short-term inflation protection fund

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  • amateur finance

    Anonymous Poster

    3 years ago 04/17/2021 8:39pm EDT

    I'm concerned about the integrity of the US dollar. Suppose I want to allocate a portion of my cash savings into a dedicated fund that is intended solely to hedge against the risk of dollar weakness compared to other currencies and commodities over a 1-2 year period. I do not wish to expose myself to equities volatility. How would this go?

    -66.66% in diversified non-USD currencies in the form of dollar-bearish ETFs and/or a FOREX account

    -11.11% in exchange traded gold

    -11.11% in commodities ETFs

    -11.11% in TIPS ETFs (underweighted because the CPI is bullsh*t)

  • IAmAFailure

    Anonymous Poster

    3 years ago 04/18/2021 2:45pm EDT
    re: amateur finance

    Why are you so concerned about dollar weakness?

    Anyway, maybe look into ETFs that focus on international bonds. You have a high allocation of your portfolio in currency. Personally, I would feel a little nervous, but that is just me.

  • registered

    agip

    Member since 12/12/2010.

    34,290 posts. Last post 7 hours ago.
    3 years ago 04/18/2021 3:19pm EDT
    re: amateur finance

    re; TIPS - if you want a real inflation hedge buy short term TIPS, not a generic TIPS fund.

    The longer term TIPS funds react as much or more to interest rate changes as they react to inflation.

    The shorter term TIPS funds tend to react more strongly to inflation than interest rate changes.

    But obvi, being on the short end of the curve brings you less coupon. Trade off, but if fighting inflation is your goal, ST TIPS will probably work best.

  • BernieMaddows

    Anonymous Poster

    3 years ago 04/18/2021 3:50pm EDT
    re: amateur finance

    I am not worried about the US $.

    We are printing more of them everyday.

    The US$ is not going anywhere.

  • registered

    agip

    Member since 12/12/2010.

    34,290 posts. Last post 7 hours ago.
    3 years ago 04/18/2021 3:52pm EDT
    re: amateur finance

    be careful with gold...it has only a passing, weak negative correlation to inflation.

    I mean it might work as an inflation hedge, but it might not too.

    It's a strange beast that reacts to many things, and inflation is only one of them.

  • registered

    agip

    Member since 12/12/2010.

    34,290 posts. Last post 7 hours ago.
    3 years ago 04/18/2021 3:53pm EDT
    re: agip

    agip wrote:

    be careful with gold...it has only a passing, weak negative correlation to inflation.

    I mean it might work as an inflation hedge, but it might not too.

    It's a strange beast that reacts to many things, and inflation is only one of them.

    scratch the world 'negative' - it shouldn't be there.

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