Zhitong Financial APP learned that with the United States facing the most severe inflationary pressure in decades, only four inflation protected ETF worthy of the name.

Data show that after the release of better-than-expected CPI data in the United States on Tuesday, ProShares inflation expectations ETF (RINF.US) rose 0.7% Magi Daily TIPS Bear Inflation Protection ETF (CPII.US) rose 0.5% Direxion Daily TIPS Bear 2x Shares ETF (TIPD.US) rose 0.6%. The US TIPS index ETF (LTPZ.US) has risen 0.02% since 15 years ago.

Of the 25 inflation-protected ETF tracked by Bloomberg, only four ETF closed higher, underscoring how difficult it is for issuers to ease exorbitant price pressures even if issuers introduce a large number of products that promise inflation protection to the market. With inflation data nearing their highest level in 40 years, most ETF are on a downward trend this year as these ETF hold US inflation protected bonds (TIPS), which are weighed down by relatively stable break-even inflation, a measure of the difference between fixed interest rates and inflation-protected securities.

However, with traders betting that the Fed will raise interest rates by 100bp next week, the sell-off is more likely to be shorter-term bonds, while funds such as RINF and LTPZ track longer-term bonds.

"because of the high credibility of the Fed and major central banks, break-even inflation has not really expanded despite high inflation," said Subadra Rajappa, head of US interest rate strategy at Societe Generale. "the market expects the Fed to raise interest rates more aggressively in future meetings, which is the main volatility of the market."

RINF has returned more than 8% so far in 2022, making it one of the best-performing inflation-protected ETF this year, according to Bloomberg data. Although the $28.7 billion iShares TIPS ETF (TIP.US) is the largest of its kind, it has lost more than 9 per cent.