If you want to know what to own during inflation, know one word: Oil.
It’s no AMC Entertainment (AMC) stock. But Wells Fargo found the price of oil to jump more than 40% during inflationary periods since 2000. It surely tops the 10% inflation-period gain of U.S. large stocks like the S&P 500.
Oil’s inflation-times rise is also more than any other major asset class the bank looked at. Oil’s gain during inflationary periods is also roughly three-times higher than the average 12% rise of all 15 assets Wells Fargo studied.
Remarkably, investors have already sniffed this out. The United States Oil Fund (USO), a major ETF that tracks the price of oil, is up 43.2% in 2021 so far. That’s a larger jump, too, than any other ETFs tracking the asset classes Wells Fargo analyzed.
What’s the No. 2 top asset class in times of inflation then? It’s not gold — that’s third (with a 16% inflationary period rise). It’s emerging markets stocks, which put up 18% gains during periods of inflation post 2000, Wells Fargo found.
And if that’s the case again now, there could be some upside left. The Vanguard FTSE Emerging Markets ETF (VWO) is up just 6.6% this year.
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