Ben Bernanke might not see inflation on the horizon, but after years of a high-liquidity diet from the Federal Reserve, historic deficit spending in Washington and little discernible economic growth to show for it, investors are rationally starting to wonder if inflation -- an undue and fraudulent expansion of prices -- could be forthcoming after a nearly 30-year hiatus.
In anticipation, many have been buying gold or commodities. Others are shorting bonds to bet on higher interest rates. Both moves, for various reasons, tend to correlate imperfectly with inflation itself.
Now a new pair of exchange-traded funds offer aim to provide a more precise solution by specifically following long-term inflation expectations, allowing everyday investors to bet on or against inflation just as big institutions have been for years.
ProShares 30 Year TIPS/TSY Spread (RINF)
The funds' approach essentially nets out interest rate risk, leaving investors with a manner by which to wage or on the market's pure forecast for future inflation.
When TIPS outperform Treasurys of comparable duration, the market is signaling it expects inflation will increase, benefiting the ProShares 30 Year TIPS/TSY Spread fund. If inflation is expected to decline, ProShares Short 30 Year TIPS/TSY Spread (FINF),
After being introduced in 1993, the country's first ETF, the S&P 500 SPDR (SPY),