: Investors are taking hard-to-ignore inflation `seriously’ when it comes to their portfolios

Brendan Smialowski/Agence France-Presse/Getty ImagesInvestors are taking the current wave of higher U.S. inflation as reason to consider tweaking their portfolios, by investing in stocks sensitive to higher interest rates.Those are the findings of a quarterly tracking study of experienced investors by E*TRADE Financial Holdings, released Tuesday. The study shows that over two out of five investors, or 43%, are considering making such a move — even though the majority, or 78%, believe recent high inflation readings are transitory as does the Federal Reserve. The results of the survey, taken from July 1 to July 9, show that as inflation fears ebb in financial markets, investors are still looking to protect themselves from price gains. Inflation was cited as the top portfolio risk among investors in the survey, jumping 21 percentage points versus the last quarter, and the headline year-over-year consumer price index has risen by more than 5% for three straight months.“While inflation has been in the spotlight for quite some time now, we’re starting to see the pace moderate a bit, supporting the Fed’s transitory position,” Mike Loewengart, managing director of investment strategy at E*TRADE, said in a release. “But as consumers face rising prices in their day-to-day lives amid supply bottlenecks, labor shortages, and increased demand, inflation is pretty hard to ignore. So, it’s no surprise that investors are taking inflation seriously when it comes to their portfolios.”To be sure, financial markets are still more or less focused on the potential for an economic rebound from the COVID-19 pandemic, with major stock indexes DJIA, SPX and COMP grinding higher on Tuesday. Still, there’s a lingering need for investors to hedge inflation, with some pointing to the Russell 2000 index RUT as one of the best options. Read:Here’s the No. 1 stock index you want to own to stay on top of inflationOver two in three or 67% of investors surveyed by E*TRADE expect Federal Reserve policy makers to raise interest rates in 2022, with 42% expecting that to happen in the first half of next year. That’s sooner than the 2023 timeframe Fed officials have penciled in.The survey was conducted online among 898 self-directed active investors, who manage at least $10,000 in a brokerage account. It has a margin of error of plus or minus 3.2%. E*TRADE was acquired last October by Morgan Stanley MS. E*TRADE Financial Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

: Investors are taking hard-to-ignore inflation `seriously’ when it comes to their portfolios
Brendan Smialowski/Agence France-Presse/Getty ImagesInvestors are taking the current wave of higher U.S. inflation as reason to consider tweaking their portfolios, by investing in stocks sensitive to higher interest rates.Those are the findings of a quarterly tracking study of experienced investors by E*TRADE Financial Holdings, released Tuesday. The study shows that over two out of five investors, or 43%, are considering making such a move — even though the majority, or 78%, believe recent high inflation readings are transitory as does the Federal Reserve. The results of the survey, taken from July 1 to July 9, show that as inflation fears ebb in financial markets, investors are still looking to protect themselves from price gains. Inflation was cited as the top portfolio risk among investors in the survey, jumping 21 percentage points versus the last quarter, and the headline year-over-year consumer price index has risen by more than 5% for three straight months.“While inflation has been in the spotlight for quite some time now, we’re starting to see the pace moderate a bit, supporting the Fed’s transitory position,” Mike Loewengart, managing director of investment strategy at E*TRADE, said in a release. “But as consumers face rising prices in their day-to-day lives amid supply bottlenecks, labor shortages, and increased demand, inflation is pretty hard to ignore. So, it’s no surprise that investors are taking inflation seriously when it comes to their portfolios.”To be sure, financial markets are still more or less focused on the potential for an economic rebound from the COVID-19 pandemic, with major stock indexes DJIA, SPX and COMP grinding higher on Tuesday. Still, there’s a lingering need for investors to hedge inflation, with some pointing to the Russell 2000 index RUT as one of the best options. Read:Here’s the No. 1 stock index you want to own to stay on top of inflationOver two in three or 67% of investors surveyed by E*TRADE expect Federal Reserve policy makers to raise interest rates in 2022, with 42% expecting that to happen in the first half of next year. That’s sooner than the 2023 timeframe Fed officials have penciled in.The survey was conducted online among 898 self-directed active investors, who manage at least $10,000 in a brokerage account. It has a margin of error of plus or minus 3.2%. E*TRADE was acquired last October by Morgan Stanley MS. E*TRADE Financial Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.