Here is a list of inflation, stagflation, and declining dollar hedges

Original Reddit post

The author compiles a list of ETFs and assets positioned as hedges against US stagflation, inflation and a weakening dollar, with brief causal notes on each, and a parallel list of assets expected to fare poorly.

VXUS — LONG The author argues non-US equities are a primary hedge because US stagnation would drive a weakening dollar, and foreign equities, especially in whatever currency emerges from dollar flight, would likely be the best performing asset class. He names VXUS, VEU or VT as example vehicles, i.e. broad ex-US or total-world equity exposure. No timeframe or specific risk is stated for this leg.

US stagnation would drive a weakening dollar. Foreign equities, probably those in whatever currency emerged from the vacuum of dollar flight, would likely be the best performing asset class.

VTI — LONG The author holds that even a US total-market equity fund provides meaningful international diversification because roughly 40% of its companies' revenues come from outside the US. That revenue mix would cushion results if the dollar weakens. No timeframe or downside risk is given for this leg.

40% of revenues for VTI companies come from outside the US. VTI provides significant international diversity if the dollar weakens.

AVUV — LONG The author notes small cap value stocks performed well during the 1973-1982 Great Inflation and are cheaper relative to growth stocks, so they offer relative value rather than a pure inflation hedge. He suggests AVDV to combine non-US exposure with small cap value, naming DFSV, AVUV and AVDV as examples. He explicitly describes this as not an inflation hedge per se.

Small cap value stocks performed well from 1973 to 1982 (the Great Inflation). Not part of an inflation hedge per se but cheaper relative to growth stocks. Could use AVDV to combine assets outside the US with small cap value.

VTIP — LONG The author's claim is that TIPS, held via VTIP or bought directly, outperform long-term bonds during periods of high inflation. The mechanism is direct inflation-linked principal adjustment versus fixed long-duration coupons. No timeframe or risk is stated.

TIPS outperform long-term bonds in high inflation

VCMDX — LONG The author uses commodities as an inflation hedge, citing gold's move from $35 an ounce early in the 1970s to as high as $850 by 1980. The stated catalyst is aggressive QE, trade partners dumping bonds, or a general move away from the dollar, which could make gold spike. VCMDX is the named example vehicle.

In the 1970s, gold went from $35 an ounce at the beginning of the decade to as high as $850 by 1980. If there is aggressive QE / trade partners dumping bonds or moving away from the dollars then gold could spike.

XLE — LONG The author argues energy ETFs such as XLE or VDE are a direct hedge against inflation because rising energy costs drive up broader consumer prices, and energy companies have good pricing power. This is a margin/pricing-power mechanism rather than a commodity-price trade. No timeframe or risk is stated.

Energy ETFs serve as a direct hedge against inflation because rising energy costs drive up broader consumer prices. Energy companies have good pricing power.

XME — LONG The author presents mining equities (XME, GDX, PICK as examples) as leveraged plays on raw commodities with growth potential during inflation. The stated risk is that these carry higher operational and equity risks than directly purchasing commodities. No timeframe is given.

Mining company investments as leveraged plays on raw commodities, offering growth potential during inflation but carrying higher operational and equity risks than directly purchasing commodities.

IFRA — LONG The author views infrastructure assets such as toll roads, pipelines, ports, cell towers and electricity networks as inflation hedges because their revenues are contractually linked to inflation. He names IFRA, TOLL and PAVE internationally and IGF and VPU in the US as example vehicles. No timeframe or risk is stated.

Toll roads, pipelines, ports, cell towers, electricity networks, etc. Revenues are contractually linked to inflation.

IXJ — LONG The author lists healthcare, via IXJ with some in IYK, as an inflation hedge on the basis that the sector has high pricing power. The rationale is sector-level margin protection rather than any company-specific catalyst. No timeframe or downside risk is stated.

Healthcare has high pricing power.

XLP — LONG The author argues consumer staples companies, via XLP or IYK, retain high pricing power and relatively low capital costs, making them an inflation hedge. The mechanism is the ability to pass through cost increases without heavy reinvestment needs. No timeframe or risk is stated.

Consumer staples companies retain high pricing power and relatively low capital costs

BRK.B — LONG The author lists Berkshire Hathaway as a stagflation hedge, citing that the company is concerned about stagflation and performed well in past periods of stagflation. The historical-performance argument is the whole rationale; no specific catalyst or timeframe is given.

Berkshire Hathaway is concerned about stagflation and performed well in past periods of stagflation

QUAL — LONG The author's view is that companies with low leverage do better during high inflation, and names QUAL or AVUQ as example vehicles. The mechanism is that heavily indebted firms must refinance at high rates, while low-debt companies avoid that drag. No timeframe or risk is stated.

Companies with low leverage do better during high inflation.