After the consumer price index, or CPI, peaked at 9.1% in June 2022, inflation steadily cooled as the Federal Reserve embarked on one of the most aggressive interest rate hiking cycles in decades. Even so, policymakers never succeeded in bringing inflation back to their long-run target of 2% annually.
“Inflation is increasingly a function of structural changes in the macro environment,” explains Matthew Bartolini, managing director and global head of research strategists at State Street Investment Management. “Deglobalization, geopolitical fragmentation and more capital-intensive growth dynamics have made price pressures more episodic.”
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Since the conflict involving Iran escalated in February 2026, inflationary pressures have renewed. The latest CPI report for May 2026 showed headline inflation running at 4.2% year over year.
While food prices rose a comparatively modest 3.1%, energy prices surged 23.5%, accounting for much of the acceleration. Following military strikes by the U.S. and Israel, Iran blockaded traffic through the Strait of Hormuz, a critical chokepoint that handles roughly one-fifth of global oil shipments, sending gasoline prices sharply higher.
Fuel is a key input for trucking companies, airlines, railroads, manufacturers and utilities, increasing transportation and production costs throughout the economy. Businesses often pass those higher costs on to consumers to preserve margins, which can create second-order inflation effects across industries ranging from consumer goods and food production to travel and retail.
The latest personal consumption expenditures, or PCE, print reinforced those concerns. Unlike CPI, which measures a fixed basket of goods and services, PCE adjusts for changes in consumer spending patterns and has broader coverage. Because of that, it is the Federal Reserve’s preferred measure of inflation. In May, core PCE inflation also accelerated to 4.1%, reinforcing the view that inflationary pressures remain well above the central bank’s target.
With inflation still elevated, the Federal Reserve, now led by Chairman Kevin Warsh following Jerome Powell’s departure, has kept its policy rate unchanged at 3.5% to 3.75%. Until inflation moves closer to the Fed’s 2% objective, policymakers may remain reluctant to ease monetary policy.
“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.
Stocks have historically been one of the most effective long-term hedges against inflation. Corporate earnings, dividends and share buybacks have tended to grow over time, while stock prices, which are denominated in dollars, have generally risen alongside the cumulative effects of inflation.
Within equities, sectors such as utilities and consumer staples produce goods and services that are themselves major components of inflation. Outside the stock market, investors may also find inflation protection through precious metals such as gold, or futures contracts tied to oil and natural gas.
Here are seven of the best exchange-traded funds, or ETFs, to fight inflation in 2026:
| ETF | Expense Ratio |
| VanEck Real Assets ETF (ticker: RAAX) | 0.69% |
| 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% |
| State Street Multi-Asset Real Return ETF (RLY) | 0.50% |
| State Street Bridgewater All Weather ETF (ALLW) | 0.85% |
| ProShares Inflation Expectations ETF (RINF) | 0.30%* |
*Reduced fee via contractual waiver through Sept. 30, 2026.
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 allocation via multiple ETFs from not only VanEck, but also competing issuers like First Trust, Global X, iShares and State Street, along with some direct equity holdings. RAAX charges a 0.69% expense ratio and pays a 2.2% 30-day SEC yield.
“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. Year-to-date as of May end, RAAX is up 17.8% on a total return basis.
Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)
“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,” says Kathy Kriskey, head of alternatives ETF strategy at Invesco. “We typically see investors using approximately a 5% allocation to PDBC to hedge the risk of increasing CPI levels.” This commodity futures ETF charges a 0.59% expense ratio.
PDBC’s current exposure is allocated across four major commodity segments: energy, precious metals, industrial metals and agriculture. The “optimum yield” strategy selects futures contracts that may offer more favorable characteristics rather than simply holding the nearest expiration. However, investors should be aware that PDBC has historically made sizable capital gains distributions near year-end.
Avantis Inflation Focused Equity ETF (AVIE)
“AVIE invests in industries that have historically exhibited higher correlation with CPI, and then within those industries looks for companies with more attractive valuations,” explains Phil McInnis, chief investment strategist at Avantis Investors. The ETF’s portfolio currently spans just over 360 companies, and is overweight sectors like energy, healthcare and consumer staples relative to the S&P 500.
“We see a lot of investors deploying commodity-oriented strategies in their portfolios as a partial inflation hedge,” McInnis says. “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.” This approach can provide better long-term total returns thanks to buybacks and dividends.
[READ: 7 Best Long-Term ETFs to Buy and Hold]
Dimensional Inflation-Protected Securities ETF (DFIP)
“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.”
Inflation protection without equity risk can be achieved via allocating to Treasury inflation-protected securities, or TIPS. “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.”
State Street Multi-Asset Real Return ETF (RLY)
“Rather than requiring investors to rebalance across commodities, infrastructure and other inflation-sensitive segments individually, strategies like RLY package those exposures into a more efficient multi-asset framework,” Bartolini explains. Like RAAX, RLY uses a fund-of-funds strategy via various State Street and third-party ETFs. The ETF charges a 0.5% expense ratio, which is inclusive of underlying ETFs.
“In each calendar year since 2021, RLY has generated positive returns even during periods when individual underlying asset classes experienced negative returns, highlighting the benefit of a diversified, portfolio-based approach in a more uncertain inflation environment,” Bartolini says. The ETF also delivers above-average income potential with a 3.2% 30-day SEC yield, paid on a quarterly basis.
State Street Bridgewater All Weather ETF (ALLW)
“As inflation and growth become less aligned, a traditional 60-40 allocation between stocks and bonds can leave portfolios more exposed to shifting correlations,” Bartolini explains. “Strategies like ALLW extend beyond that approach by incorporating gold, commodities and inflation-linked bonds alongside global equities.” This ETF has proven highly popular, growing to over $1.5 billion in assets.
ALLW is closer to a hedge fund than a traditional ETF due to its higher 0.85% expense ratio and use of leverage. “By using leverage in a measured and capital-efficient way, ALLW’s strategy enables a more balanced allocation of risk across growth and contraction as well as rising and falling inflation, allowing for a more consistent allocation of risk across environments,” Bartolini explains.
ProShares Inflation Expectations ETF (RINF)
RINF packages another strategy more commonly associated with hedge funds into an ETF wrapper. This ETF simultaneously goes long 30-year TIPS and shorts 30-year nominal Treasurys using swaps. If inflation proves higher than investors anticipate, TIPS generally become more valuable because their principal adjusts with CPI, while nominal Treasury bond prices typically come under greater pressure.
RINF’s relative-value approach therefore isolates changes in inflation expectations rather than making a broad bet on interest rates alone. While the strategy struggled during the low-inflation environment that prevailed from 2012 through 2020, it has benefited from the return of elevated inflationary pressures from 2021 onward. The ETF charges a 1.12% gross expense ratio, waived down to 0.3% net through the end of September.
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7 of the Best ETFs to Fight Inflation originally appeared on usnews.com
Update 06/29/26: This story was published at an earlier date and has been updated with new information.
