3 Equity ETFs Designed to Combat Inflation in 2025

Amid escalating inflation concerns, investors are increasingly leveraging equity-based ETFs for portfolio protection. The article details three distinct approaches: the actively managed Horizon Kinetics Inflation Beneficiaries ETF (INFL) offers a concentrated, high-conviction strategy in real assets, yielding 9.72% YTD with a 0.85% expense ratio. In contrast, the index-based Fidelity Stocks for Inflation ETF (FCPI) provides broad U.S. large/mid-cap exposure via a multifactor model, returning 8.43% YTD at 0.16%. The actively managed Avantis Inflation Focused Equity ETF (AVIE) takes a fundamentally driven, value-tilted approach, with a 1.62% YTD return and 0.25% expense ratio. These diverse offerings underscore varied philosophies for institutional investors seeking to hedge against persistent inflationary pressures.

Analysis

Amid persistent inflation concerns, investors are evaluating distinct equity ETF strategies for portfolio protection. A clear performance and strategy divergence is evident among the highlighted funds. The Horizon Kinetics Inflation Beneficiaries ETF (INFL) employs a high-conviction, actively managed approach with a concentrated portfolio of 41 holdings in real asset and commodity-linked firms, which has yielded a superior 9.72% year-to-date return despite a high 0.85% expense ratio and associated volatility. In contrast, the Fidelity Stocks for Inflation ETF (FCPI) offers a more diversified, low-cost solution, returning 8.43% YTD with an expense ratio of just 0.16% by tracking a multifactor index of U.S. large- and mid-cap stocks. The Avantis Inflation Focused Equity ETF (AVIE), another actively managed fund focused on profitability and valuation, has significantly underperformed with a 1.62% YTD return, and its small asset base of $6 million suggests it has yet to gain significant traction despite a competitive 0.25% expense ratio. The comparison illustrates a key trade-off between INFL's high-cost, concentrated strategy delivering alpha and FCPI's low-cost, diversified approach providing broad, inflation-adjusted market exposure.

Key Decisions for Investors

• Investors with a higher risk tolerance seeking direct and aggressive exposure to inflation beneficiaries should evaluate INFL, accepting its 0.85% expense ratio and higher volatility for its demonstrated 9.72% YTD outperformance.
• For a core holding designed to hedge inflation within a broader portfolio, FCPI presents a compelling option due to its low 0.16% expense ratio, diversified large- and mid-cap exposure, and strong 8.43% YTD return.
• Caution is warranted with AVIE; its significant underperformance and low asset base of $6 million suggest investors should await a more established track record before considering it as a primary inflation-hedging vehicle, despite its value-focused strategy.
• The selection between these ETFs should be guided by an investor's conviction in concentrated, commodity-linked bets versus a diversified, factor-based approach to navigating the current inflationary environment.