U.S. Inflation Stands Tall: 4 Sector ETFs to Win

The annual inflation rate in the United States accelerated to 7% in December of 2021, marking a new high since June of 1982, in line with market expectations and compared with 6.8% in November. Energy led to the jump but the rise was smaller than in November (29.3% vs 33.3%). Notably, inflation was 0.5% in December sequentially after an 0.8% inflation in November.

Inflation was hot for shelter, food, new vehicles, used cars and trucks, apparel and medical care services, per tradingeconomics. Vanguard Real Estate Index Fund ETF Shares VNQ, AdvisorShares Restaurant ETF EATZ, First Trust NASDAQ Global Auto Index Fund CARZ and iShares U.S. Healthcare Providers ETF IHF are some of the sector ETFs that stand to gain from the latest inflation report.

Real Estate

The index for all items less food and energy increased 0.6% in December. The shelter index increased 0.4% in December as the indexes for rent and owners’ equivalent rent both gained 0.4%, the same increases as in November and October.

Vanguard Real Estate ETF (VNQ) – The Vanguard Real Estate ETF seeks to track the performance of the MSCI US Investable Market Real Estate 25/50 Index.

Auto

The index for new vehicles continued to rise, increasing 1.0% in December, marking its eighth successive monthly rise of at least 1.0%. The index for used cars and trucks rose 3.5% in December after increasing 2.5% in each of the prior two months.

First Trust NASDAQ Global Auto ETF (CARZ) – The underlying NASDAQ OMX Global Auto Index is designed to track the performance of the largest and most liquid companies engaged in manufacturing of automobiles.

Restaurants

The food away from home index rose 0.6% sequentially in December after the same inflation in November. The index for full-service meals jumped 0.8% and the index for limited-service meals shot up 0.6% sequentially. The index for food away from home rose 6.0% year over year, the largest increase since January 1982.  This points to the fact that restaurants are charging higher.

AdvisorShares Restaurant ETF (EATZ) – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.

Medical Care Services

The medical care index rose 0.3% sequentially in December. The index for hospital services increased 0.2% and the index for prescription drugs rose 0.1%, while the index for physicians’ services was unchanged.

iShares U.S. Healthcare Providers ETF (IHF) – The underlying Dow Jones U.S. Select HealthCare Providers Index of the fund measures the performance of health care providers’ sub-sector of the U.S. equity market. It includes health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes plus rehabilitation & retirement centers.

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Vanguard Real Estate ETF (VNQ): ETF Research Reports
 
iShares U.S. Healthcare Providers ETF (IHF): ETF Research Reports
 
First Trust NASDAQ Global Auto ETF (CARZ): ETF Research Reports
 
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
 
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