Bolster Your Portfolio for Hot Inflation with These ETFs, Bank of America Says

Why It Matters

With inflation persisting above the Fed’s 2% goal, investors need assets that can preserve purchasing power; the suggested ETFs provide exposure to commodities and value stocks that historically outperform during price‑rise cycles.

Key Takeaways

• IYM, TPYP, URA up ~20% YTD, low expense ratios.
• URA targets uranium $135/lb by 2027, supporting nuclear demand.
• Small‑cap value ETFs AVDV and SVAL deliver 14‑17% YTD gains.
• Pipeline MLP ETF TPYP offers ~3.2% dividend yield.

Pulse Analysis

Inflation’s resurgence has forced portfolio managers to revisit asset allocation fundamentals. While low‑interest‑rate environments once rewarded pure equity exposure, rising consumer‑price indexes now favor assets that can pass price increases onto investors. Real assets—especially commodities and infrastructure—have a built‑in inflation hedge, as their cash flows are tied to the price of the underlying goods. Bank of America’s endorsement of ETFs like IYM, TPYP and URA reflects a broader market tilt toward sectors that benefit from higher raw‑material costs and energy demand, while still offering the liquidity and diversification of exchange‑traded funds.

The three real‑asset ETFs highlighted each target a distinct inflation driver. IYM captures the broader metals and mining space, benefiting from copper’s record highs and a rebound in industrial demand. TPYP provides exposure to North American pipeline master‑limited partnerships, delivering a steady ~3.2% yield and capital appreciation as energy transport fees rise with oil prices. URA bets on a projected uranium price of $135 per pound by 2027, positioning investors to profit from the global push toward nuclear power as governments seek low‑carbon energy sources. All three funds trade below long‑term valuation averages, enhancing their upside potential.

Beyond commodities, Bank of America points to small‑cap value as an undervalued growth engine. ETFs such as AVDV and SVAL have already posted 14‑17% returns this year, driven by tighter earnings multiples and stronger cash flows in niche market segments. International small‑cap exposure adds geographic diversification, reducing reliance on the U.S. market’s cyclical swings. For investors constructing inflation‑resilient portfolios, blending real‑asset ETFs with small‑cap value funds can balance income, growth, and risk, creating a more robust defense against persistent price pressures.