Federal Reserve Chair Jerome Powell currently finds himself between a rock and a hard place, as the central bank’s dual mandate of promoting maximum employment and maintaining stable prices comes under renewed political pressure.
In particular, President Donald Trump has insisted that Powell cut interest rates, arguing they are too restrictive. Despite recent consumer price index (CPI) reports showing slowing inflation compared to the 2022 spike, Powell has held firm.
Speaking recently at the European Central Bank forum in Portugal, Powell explained that the Fed is in a holding pattern on rate cuts. He cited concerns over the potential impact of tariffs proposed by the Trump administration. The Fed believes a new wave of tariffs could potentially reignite inflation.
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Trump, for his part, has made his position clear and even publicly criticized Powell on social media. The president even sent Powell a letter urging rate cuts, complete with a chart comparing interest rates set by international central banks.
The Fed is designed to operate independently of the White House, but recent developments have raised questions among market participants about how it will weigh economic data alongside increasing political pressure from the executive branch.
Therefore, investors who are concerned about the long-term inflationary effects of broad tariffs may want to act preemptively by adjusting their portfolios.
“We believe we’re in the midst of a secular inflation regime, driven by years of government overspending and financial excess,” argues David Schassler, head of multi-asset solutions at VanEck. “The so-called ‘Big, Beautiful Bill’ is projected by the Congressional Budget Office to add over $2.4 trillion to the deficit.”
One way to do this is with exchange-traded funds (ETFs). In recent years, asset managers have responded to retail demand by launching ETFs specifically designed to hedge inflation risk.
These funds span asset classes including equities, fixed income and commodities and offer affordable, accessible ways to guard against purchasing power erosion.
“When considering future consumption, one of the primary goals for investors may be the preservation of their purchasing power,” explains Douglas Longo, co-head of product specialists and vice president at Dimensional Fund Advisors. “If the real return the investor receives after inflation is negative, purchasing power may be eroded, thus leaving a gap between the investor’s wealth and liabilities.”
Here are seven of the best ETFs to fight inflation with in 2025:
| ETF | Expense ratio |
| VanEck Real Assets ETF (ticker: RAAX) | 0.75% |
| Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) | 0.59% |
| Avantis Inflation Focused Equity ETF (AVIE) | 0.25% |
| Dimensional Inflation-Protected Securities ETF (DFIP) | 0.11% |
| Alerian MLP ETF (AMLP) | 0.85% |
| ProShares Inflation Expectations ETF (RINF) | 0.30% |
| iShares U.S. Infrastructure ETF (IFRA) | 0.30% |
VanEck Real Assets ETF (RAAX)
“Our base case is a prolonged stretch of elevated, but manageable inflation, and RAAX is built for this environment,” Schassler says. This ETF uses a fund of funds structure to tactically allocate to different underlying ETFs screened for inflation sensitivity. RAAX held up well during the initial onset of high inflation in 2021, ending that year with a 28.8% return before returning 1.8% in 2022’s bear market.
“RAAX brings together a powerful mix of inflation-fighting assets: physical gold and gold miners to hedge monetary debasement, commodities and natural resource equities for raw pricing power, and income-generating real assets like infrastructure and real estate for resilient cash flow in a rising-cost world,” Schassler explains. The ETF charges a 0.75% net expense ratio and pays a 1.7% 30-day SEC yield.
Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)
“PDBC is the largest broad-based commodity ETF and recently won the award for ‘Best Commodity ETF’ at the ETF.com awards ceremony,” says Kathy Kriskey, head of alternatives ETF strategy at Invesco. “This commodity fund is often the choice for investors seeking to hedge inflation risk.” The ETF holds cash collateral and a portfolio of 14 energy, precious metals, industrial metals and agriculture futures.
“Commodities tend to be the most efficient hedge for inflation, meaning investors only need a small allocation to potentially cover inflation risk in a portfolio,” Kriskey explains. “We typically see investors using approximately a 5% allocation to PDBC to hedge the risk of increasing CPI levels.” The ETF charges a 0.59% net expense ratio and does not require investors to file a schedule K-1 form for tax purposes.
Avantis Inflation Focused Equity ETF (AVIE)
“We see a lot of investors deploying commodity-oriented strategies in their portfolios as a partial inflation hedge,” says Phil McInnis, chief investment strategist at Avantis Investors. “Our goal with AVIE was to design a strategy that has similar correlation with CPI as commodity-oriented strategies, but with an equity driver of returns underneath.” Unlike PDBC, this ETF doesn’t trade any futures.
Instead, AVIE’s portfolio consists of a diversified basket of U.S. stocks weighted toward the health care, energy, financials and consumer staples sectors. “AVIE invests in industries that have historically exhibited higher correlation with CPI, and then within those industries looks for companies with more attractive valuations,” McInnis explains. The ETF charges a 0.25% expense ratio.
Dimensional Inflation-Protected Securities ETF (DFIP)
Nominal bonds are highly vulnerable to inflation because rising prices erode the purchasing power of their fixed interest payments. If you earn 3% annually from a bond but inflation runs at 4%, you’re effectively losing money. A more resilient alternative is Treasury Inflation-Protected Securities (TIPS), which adjust their principal value based on changes in CPI. TIPS can be accessed via ETFs like DFIP.
“DFIP is designed for investors who want to hold a portfolio with a duration similar to the broad TIPS market,” Longo says. “The portfolio focuses on TIPS with maturities ranging from five to 20 years, though it may continue to hold TIPS as their maturities fall below five years.” The ETF charges a reasonable 0.11% expense ratio and is highly liquid, trading with a 0.02% 30-day median bid-ask spread.
[READ: 7 Best Treasury ETFs to Buy Now]
Alerian MLP ETF (AMLP)
Inflation resistance and above-average dividend yields can be obtained via investing in master limited partnerships (MLPs), which own and operate energy infrastructure assets like pipelines, storage facilities and processing plants. However, MLPs have a unique corporate structure where investors are treated as limited partners, meaning they receive a schedule K-1. This tax form can complicate and delay filings.
AMLP solves this issue by issuing a 1099 tax form, making it much simpler for investors to report income. It tracks the Alerian MLP Infrastructure Index, making it significantly more diversified than owning a single MLP. In the high-inflation years of 2021 and 2022, the ETF returned 39.5% and 25.1%, respectively. AMLP charges a 0.85% expense ratio and currently pays out a 7.9% dividend rate on a trailing-12-month basis.
ProShares Inflation Expectations ETF (RINF)
RINF provides a unique approach to inflation hedging using a long-short strategy. It tracks the FTSE 30-Year TIPS Treasury Rate Hedged Index, which measures the difference, or spread, between yields on nominal Treasury bonds and TIPS of the same maturity. RINF is designed to profit when inflation expectations rise, as that typically widens the spread and causes TIPS to outperform nominal bonds.
To achieve this goal, RINF takes three key positions: It goes long on 30-year TIPS, shorts 30-year Treasurys and holds cash equivalents to earn interest on collateral from the short leg. This ETF underperformed from 2012 to 2020 during a low-rate, low-inflation environment, but has been on a steady uptrend since 2021 as inflationary pressures returned to the forefront.
iShares U.S. Infrastructure ETF (IFRA)
Infrastructure isn’t one of the 11 official Global Industry Classification System sectors. Instead, it’s best thought of as a cross-sector theme that draws from utilities, industrials, materials and energy. These companies tend to be inflation sensitive. Many operate like tollbooths, able to pass rising costs onto end users through regulated pricing or long-term contracts. This helps protect both margins and earnings when inflation picks up.
IFRA tracks the NYSE FactSet U.S. Infrastructure Index, which holds around 150 companies. The portfolio includes major names across freight rail, power generation and utility networks. It returned 29.8% in 2021, during the initial wave of post-COVID inflation, and held up relatively well in 2022’s bear market, ending the year down just 3.1%. IFRA charges a 0.3% expense ratio and pays a 1.8% 30-day SEC yield.
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7 of the Best ETFs to Fight Inflation originally appeared on usnews.com
Update 07/08/25: This story was published at an earlier date and has been updated with new information.
