The Federal Reserve operates under a dual mandate: maintaining price stability while also promoting maximum employment. Those two goals rarely move in opposite directions, but when they do, policymakers face a difficult balancing act.
The risk currently attracting attention is stagflation, a term combining “stagnation” and “inflation,” which describes a period where economic growth weakens while prices continue climbing.
Recent economic data has raised concerns that such conditions could begin to emerge. The Bureau of Labor Statistics recently reported that the U.S. economy shed 92,000 jobs in February.
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Reuters also reported that social media and artificial intelligence giant Meta Platforms Inc. (ticker: META) is planning layoffs affecting up to 20% of its workforce, following a similar move by Block Inc. (XYZ) CEO Jack Dorsey, whose company cut more than 4,000 jobs.
That covers the first ingredient of a stagflationary setup: a weakening labor market. The second comes from a recent dramatic surge in energy prices.
West Texas Intermediate crude oil futures are now trading around $97 per barrel as of March 16, nearly double the $55 level recorded in December. Brent crude has climbed to $102 per barrel over the same period, up from about $58 at the end of last year.
Much of that surge has been driven by the ongoing conflict between the U.S. and Israel against Iran, which began Feb. 28. The fighting has repeatedly disrupted shipping through the Strait of Hormuz, a critical artery for global energy shipments. Iran has targeted vessels linked to Western interests, adding further volatility to energy markets. Governments around the world have attempted to stabilize prices through strategic petroleum reserve releases, but those measures have had only limited impact.
“The war with Iran has materially increased the risk of another inflation wave,” says David Schassler, head of multi-asset solutions at VanEck. “Oil above $100 per barrel moves quickly into transportation, food and manufacturing, and sustained energy shocks also pressure growth.”
Energy is a major component of both the consumer price index and the personal consumption expenditures index, the Federal Reserve’s preferred inflation gauge. Higher fuel costs also ripple across the economy, increasing expenses for companies and consumers alike.
“The convergence of data we’re seeing this month is precisely the stagflationary setup that should have investors rethinking their portfolio construction assumptions,” says Paisley Nardini, managing director and head of multi-asset solutions at Simplify Asset Management. “The labor market has effectively stalled, yet the inflation data doesn’t give the Fed the cover it needs to respond aggressively.”
Here are seven of the best exchange-traded funds (ETFs) to fight stagflation in 2026:
| ETF | Expense ratio |
| SPDR Gold MiniShares Trust (GLDM) | 0.10% |
| State Street Energy Select Sector SPDR ETF (XLE) | 0.08% |
| State Street Bridgewater All Weather ETF (ALLW) | 0.85% |
| Simplify Managed Futures Strategy ETF (CTA) | 0.75% |
| Amplify Energy & Natural Resources Covered Call ETF (NDIV) | 0.59% |
| VanEck Real Assets ETF (RAAX) | 0.69% |
| Astoria Real Assets ETF (PPI) | 0.60% |
SPDR Gold MiniShares Trust (GLDM)
“By the time stagflation or any other trend is clearly visible in the data, markets have often already repriced, making it challenging for investors to react in real time,” explains Matthew Bartolini, global head of research strategists at State Street Investment Management. “We are seeing this today, where the most recent CPI reading is not capturing the near-term effects of the events in the Middle East.”
One way investors can address this timing challenge is by holding assets historically resilient during inflationary periods as a long-term allocation, rather than attempting to trade them tactically. Gold has often filled that role, particularly when inflation rises while economic growth weakens. For investors seeking exposure through an ETF, GLDM offers a relatively low-cost option with a 0.1% expense ratio.
State Street Energy Select Sector SPDR ETF (XLE)
“Rather than attempting to forecast whether inflation will be transitory, persistent or accompanied by slowing growth, investors can focus on building portfolios that are structurally prepared for multiple inflation outcomes,” Bartolini explains. “This means holding assets with different, logical sensitivities to growth and inflation, so that no single macro path dominates portfolio results. ”
For example, technology currently represents roughly 33% of the S&P 500 index, while energy accounts for only about 3.7%. To help rebalance this exposure for stagflation, investors can add a dedicated allocation to commodity producers through energy stocks. XLE tracks the 22 large-cap energy companies already included in the S&P 500 and offers this exposure at a low 0.08% expense ratio.
State Street Bridgewater All Weather ETF (ALLW)
Instead of attempting to build an inflation-resistant portfolio from scratch, investors can also outsource that work to an all-in-one hedge fund ETF like ALLW. The ETF allocates across global bonds, global equities, inflation-linked bonds and commodities with built-in leverage from swaps and futures. ALLW has gained 6.2% year to date as of March 13, while the S&P 500 has declined 3% over the same period.
“Preparing means not just being diversified across geographies and assets, but the idea of macroeconomic-environmental diversification,” Bartolini says. “Rather than relying on forecasts or attempting to predict the right macroeconomic call, ALLW’s strategy balances risk across assets that tend to perform differently across rising versus falling growth, and rising versus falling inflation.”
Simplify Managed Futures Strategy ETF (CTA)
In 2022, rising inflation and interest rates caused stocks and bonds to fall at the same time, producing the 60/40 portfolio’s worst drawdowns in decades. Adding a third asset that behaves differently from both stocks and bonds may help reduce this risk. One option is CTA, which invests in futures. This alternative ETF charges a flat 0.75% expense ratio, far lower than the typical “2 and 20” charged by traditional hedge funds.
“2026 is the environment for which CTA was built, and the ETF’s four-year track record, which ironically launched precisely when stock-bond correlations became positive, validates the thesis,” Nardini says. “Managed futures and systematic trend-following strategies can thrive when markets develop sustained, directional moves, and that’s exactly what we’re seeing in energy, rates and, to a degree, equities.”
[Read: 7 Best Energy ETFs to Buy Now]
Amplify Energy & Natural Resources Covered Call ETF (NDIV)
“Stagflationary periods have often rewarded real assets such as commodities, along with companies that generate solid cash flows, have pricing power and consistently return capital to shareholders,” explains Nathan Miller, vice president of product development at Amplify ETFs. “Businesses linked to the energy and materials sectors can better absorb higher costs while offering investors a measure of resilience.”
Instead of allocating separately to energy and materials ETFs, investors can consider NDIV, which combines dividend-focused exposure to both sectors. By writing call options on its holdings, the strategy sacrifices some upside price appreciation but generates additional income from option premiums. This helps lift NDIV’s distribution yield to 10% on an annual basis. The ETF charges a 0.59% expense ratio.
VanEck Real Assets ETF (RAAX)
“We are not calling for stagflation but the risk has risen, and RAAX is positioned for this environment,” Schassler says. “It owns gold, commodities, natural resource equities and hard-asset-intensive businesses such as infrastructure and nuclear energy, all of which are tied to physical scarcity and real cash flows.” RAAX also includes an allocation to master limited partnerships, but with no Schedule K-1 form.
RAAX uses a fund-of-funds structure, which helps keep the strategy relatively simple compared with selecting individual securities. The diversification benefits have been notable. RAAX has shown a low three-year 0.4 correlation to the S&P 500 and is up 17.2% year to date on a price-return basis. The ETF charges a 0.69% net expense ratio, waived down from a 0.89% gross expense ratio.
Astoria Real Assets ETF (PPI)
Investors may also want to diversify their real asset exposure across different ETF providers to reduce manager-specific risk and style drift. This is the possibility that a single fund manager’s strategy falls out of favor or changes unfavorably over time. A lesser-known alternative to RAAX is PPI, which is smaller, at about $132 million in assets under management, but slightly more affordable, with a 0.6% expense ratio.
PPI is an actively managed, real-asset-focused ETF. It has broad discretion to allocate across 50 to 75 equities, but it can also own commodity futures, Treasury inflation-protected securities, real estate investment trusts and other ETFs. That diversified allocation has performed well so far this year amidst the uncertainty. As of March 13, PPI has gained about 12% on a price-return basis.
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7 of the Best ETFs to Fight Stagflation originally appeared on usnews.com