3 ASX ETFs that offer inflation protection for your portfolio

Inflation can slowly reduce the purchasing power of money over time which is why investors should add inflation hedging assets to their portfolios.

Investing in the following three ASX ETFs will offer Inflation protection for your portfolio.

Betashares Global Gold Miners Currency Hedged ETF (ASX: MNRS)

gives investors access to some of the world’s largest gold mining companies outside Australia through a single diversified investment option.

The ETF tracks the Nasdaq Global ex-Australia Gold Miners Hedged AUD Index which holds 49 major gold mining companies and also hedges foreign currency exposure into Australian dollars.
Major positions in the fund include global gold producers such as Wheaton Precious Metals, Agnico Eagle Mines, Newmont and Barrick Gold.

Gold mining stocks usually perform well when gold prices rise which means the ETF can offer inflation protection for an investor's portfolio because gold is widely considered a hedge against inflation and currency debasement.

MNRS also gives exposure to the global gold sector across many countries while maintaining a management fee of about 0.47% per year with additional expenses estimated at 0.1%.

The iShares Government Inflation ETF (ASX: ILB) 

gives investors exposure to Australian government inflation-linked bonds which adjust their value over time because inflation rises.

This ETF tracks the Bloomberg AusBond Inflation Government 0+ Year Index which provides access to a portfolio of fixed income securities that protect against inflation.

Most of the portfolio sits in high-quality government issuers such as the Commonwealth of Australia and state treasury corporations which ensures strong credit quality.

The expense ratio is 0.18% while the principal value of inflation-linked bonds rises when inflation increases which helps ILB offer inflation protection for an investor's portfolio and also adds diversification within fixed income assets.

Vanguard Australian Fixed Interest Index ETF (ASX: VAF) 

follows the Bloomberg AusBond Composite 0+ Year Index. This index includes more than 800 bonds which come from government and investment grade corporate issuers.

The ETF charges a management fee of about 0.10% each year. Income is paid every quarter which makes the ETF a practical choice for investors who want steady income at a low cost.
The underlying portfolio holds bonds with strong credit quality which results in a weighted average credit rating close to AA+.

During periods of economic stress or rising prices bonds often perform well which means VAF can offer Inflation Protection for investor's Portfolio while also providing stable income and diversification.

(Source: Company Reports)