One of the big ideas about crypto’s is that they can/ or some of them might protect you against money printing, maybe inflation proof as a result as there is a finite quantity of them. Cathy Woods from ARK is reported to have said that they might (cryptos) might replace bonds in a typical bond/equity portfolio.

Money printing and inflation seem to be on the back of the mind of many investors, so its quite timely that the latest ETF that we have heard about aims to protect investors from a steep increase in interest rates.

The Simplify Interest Rate Hedge ETF, allows you to simply purchase a theoretically liquid ETF and buy protection from a sharp increase in rates. It does this buy buying a combination of a Treasury bond and very long dated interest rate swaps.

With a relatively low cost any investor can henceforth purchase protection. This product is probably aimed at a investor with quite a few long dated bonds, that is concerned about the mark-to-market value decrease and eventual reduction in end value from the inflation.

What are the alternatives?
– Well perhaps actually an allocation to a stock or stock index, their valuations are intrinsically linked to inflation, as inflation makes sales and profits appear higher.

Then I ran the idea by a good friend of mine that is a portfolio manager, in fact he already has such a product, he has bought the WNMI Comdty, which is a very long dated interest rate index. If you have say an Interactive Brokers account and some leverage, you could also purchase this with leverage too, you will pay a ongoing “fee” for continually buying the product on a rolling basis, but you should see this as a small insurance cost or even a neat way to speculate on a sharp rise in rates.

Thats all for now, do you have other ideas for hedging against a sharp rate increase?