BNY Investments Recommends 3 ETFs to Counter Inflation

BNY Investments recommended three exchange-traded funds in a recent insights post as options for investors responding to higher inflation pressures after energy prices rose following the Middle East conflict earlier this year. The funds identified were the BNY Mellon Global Infrastructure Income ETF (BKGI), the BNY Mellon Dynamic Value ETF (BKDV) and the BNY Mellon Ultra Short Income ETF (BKUI).

BNY noted global infrastructure companies often have pricing power and relatively stable cash flows. The firm added some infrastructure businesses could benefit from adoption of artificial intelligence. BKGI provides diversified global exposure to traditional infrastructure sectors such as utilities and transport, and to companies that offer infrastructure-like services.

On equities, the post recommended a tilt toward large-cap value, citing historical patterns in which value stocks outperformed growth during inflationary episodes. BNY observed that sectors commonly held by value investors, including parts of the healthcare industry, may see changes in fundamentals as they adopt new technologies. BKDV is an actively managed fund that selects companies using fundamentals, business momentum and valuation metrics, with managers able to change holdings as market conditions shift.

For fixed income, BNY recommended shorter-duration bonds to reduce sensitivity to future rate changes. The post noted the recent relationship between oil prices and bond returns has turned negative, which the firm said has weakened traditional bonds’ effectiveness as an inflation hedge. BKUI is an actively managed ultra-short bond ETF that targets low duration exposure and carries an expense ratio of 12 basis points.

The post presented the three funds as examples of active approaches that seek to combine income generation and growth while addressing inflation risk. The post noted investors could use the strategies together or separately depending on individual goals and risk tolerance.

The recommendations were published as investors reassess portfolio positioning amid renewed energy-cost pressures and inflationary risks earlier this year. The post highlighted active management across equity and fixed-income vehicles as one way to respond to shifting market conditions while maintaining growth-oriented allocations.