🛡️PPI: Your Ultimate Real Assets Shield

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As the markets fluctuate, savvy investors seek strategies that can withstand volatility—and real assets are in the spotlight. Today, we're focusing on the AXS Astoria Real Assets ETF (PPI), which is designed to leverage the benefits of tangible, inflation-fighting investments. Whether you’re an experienced portfolio builder or refining your ETF collection, PPI presents a compelling opportunity. Let’s explore the reasons why.

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What is PPI?

Real assets—physical or tangible resources—are well-known for their ability to hedge against inflation. As prices rise, these assets appreciate in value or generate consistent cash flows, making them reliable anchors for a portfolio.

Real assets have become a significant tool for investors, especially in today's economic climate. PPI leads this trend by providing an advanced method for investing in real assets, utilising active management and strategic diversification. This ETF provides exposure to various sectors that historically have demonstrated resilience during inflationary periods:

• 🏭Industrials: Companies involved in manufacturing, construction, and transportation

• 🛢️Energy and Natural Resources: Oil, gas, and renewable energy companies

• 🏘️Real Estate: Both residential and commercial property investments

• 🪨Basic Materials: Mining, chemicals, and forest products

• 💡Utilities and Infrastructure: Essential services and physical infrastructure assets

• 🌾Commodities: Direct exposure to raw materials

• 🏦Financials: Banking and insurance companies that often benefit from rising rates

PPI's management team actively adjusts its holdings in response to macroeconomic changes, providing an advantage over passive ETFs in volatile markets. With rising concerns about inflation, real asset ETFs like PPI have experienced increased popularity and inflows since 2020. PPI is also a blended ETF, aiming to include 50 to 60 equity positions and diversify its portfolio with futures contracts, TIPS, REITs, and other ETFs.

Investment Strategy📊

Incorporating PPI into your investment strategy requires careful consideration of your overall portfolio allocation. Here's a strategic framework for implementation:

• 🛰️Core-Satellite Approach: Consider using PPI as a satellite position alongside your core holdings. A typical allocation might be:

  • 70-80% Core positions (broad market ETFs)

  • 20-30% Satellite positions (including PPI and other tactical investments)

• 🌊Dollar-Cost Averaging: Given the cyclical nature of real assets, implementing a dollar-cost averaging strategy can help mitigate timing risk. Consider building your position gradually over 3-6 months rather than investing a lump sum.

• ⚖️Portfolio Rebalancing: Regular rebalancing is crucial when holding real assets. Consider quarterly rebalancing to maintain your target allocation and take advantage of price movements in different asset classes.

PPI at a glance

ETF Issuer: AXS Investments (Managed by Astoria)

Inception: 2021-12-29

Asset Class: Blend

Underlying Index: it is an actively managed ETF

Geographical Focus: Global

Expense Ratio: 0.75% (as of last data point)

Dividend Yield: 1.38% (as of last data point)

Distribution Frequency: Quarterly

Historical Performance

Since its inception in 2021, the PPI ETF has demonstrated interesting performance characteristics. It has shown particular strength during rising inflation expectations and commodity price increases.

_{Effective October 15, 2024, the Fund name changed its name from AXS Astoria Inflation Sensitive ETF to the AXS Astoria Real Assets ETF and transferred its stock exchange listing to Nasdaq from the New York Stock Exchange.}

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Inflation Protection with Growth Potential: Real assets have historically provided effective inflation protection while offering potential capital appreciation. Unlike pure inflation hedges like TIPS, PPI provides exposure to companies that can grow their earnings and increase dividends over time.

2. Professional Active Management: The fund's active management approach allows tactical adjustments based on market conditions. The portfolio managers can shift allocations between different real asset categories as opportunities arise, providing a level of expertise that's particularly valuable in this complex asset class.

3. Diversification Benefits: PPI's multi-asset approach provides broader diversification than single-sector real asset investments. This diversification can help reduce portfolio volatility while maintaining exposure to inflation-sensitive assets.

Top 3 Reasons Not to Invest

1. Sector Concentration Risk: Despite its diversification across real asset categories, the fund may have significant exposure to certain sectors, such as energy and materials. This concentration can lead to increased volatility during sector-specific downturns.

2. Interest Rate Sensitivity Some real asset categories, particularly REITs and infrastructure investments, can be sensitive to interest rate changes. Rising rates negatively impact these holdings, though other portfolio components may partially offset this effect.

3. Complexity of Holdings: While the multi-asset approach is beneficial for diversification, it can make it more challenging to understand the fund's exact positioning and risk exposure at any given time. This complexity might make it harder for some investors to integrate PPI into their portfolio strategy.

🏗️Building Wealth with Real Assets

The AXS Astoria Real Assets ETF (PPI) represents a sophisticated approach to real asset investing, offering potential inflation protection alongside growth opportunities. Its actively managed, diversified approach provides unique advantages for investors navigating an increasingly complex economic environment. PPI merits serious consideration for ETF UNO readers looking to enhance their portfolio's inflation resilience while maintaining growth potential.

Successful investing goes beyond choosing the right investments; it requires a clear strategy that aligns with your goals and adjusts to market changes. PPI may be just one part of your strategy, but it can significantly impact your portfolio's long-term success.

At ETF UNO, we're committed to helping you navigate the evolving world of ETF investing. Join our community to stay informed about the latest ETF strategies, analysis, and opportunities. Together, we can build more resilient portfolios for the future.

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.