Nouriel Roubini Launches New ETF to Shield Investors from Inflation Risks

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Roubini’s Insight on Trump’s Economic Policies

Economist Nouriel Roubini, who famously predicted the 2008 financial crisis, has created an exchange-traded fund (ETF) to help shield investors from inflation risks tied to Donald Trump’s economic plans, according to Bloomberg.

Introducing the Atlas America Fund (USAF)

Roubini warns that Trump’s proposed tax cuts and tariffs may destabilize prices, putting the widely-used 60/40 investment portfolio at risk. The newly launched ETF, named the Atlas America Fund (USAF), aims to provide an alternative safety net compared to US Treasuries, which may be vulnerable in a fluctuating market.

Inflation Concerns and Strategy

“Inflation in the US and advanced economies is likely to rise steadily over time,” Roubini stated. He explained that in an environment of increasing long-term rates—whether due to inflation or growing national debt—traditional safe assets might result in losses, sometimes even more than riskier investments. “You have to find alternatives.”

Investment Approach and Management

The USAF ETF will actively manage a mix of investments across various assets, including climate-resilient real estate investment trusts, inflation-protected US Treasuries, municipal securities, corporate bonds, and gold trusts. The fund will charge an expense ratio of 75 basis points.

Market Outlook Amid Political Changes

The ETF’s launch coincides with Wall Street’s growing worries about market volatility stemming from Trump’s presidency, particularly his intentions to disrupt existing trade policies and Federal Reserve independence. Such moves could diminish the typical benefits associated with diversifying into Treasuries, especially if stock prices fall.

The 60/40 Strategy Faces Challenges

The 60/40 investment strategy, which allocates 60% of assets to stocks and 40% to Treasuries, has recently made a comeback after being challenged during the inflationary pressures of the pandemic. However, this strategy faced setbacks in October, ending a five-month winning streak, as a strong US economy led to a bond market sell-off.

Investment Philosophy and Future Goals

Roubini co-founded Atlas Capital Team, the company behind the ETF, to create investment strategies that address risks present in high-risk economic conditions. The firm is currently in discussions with Gulf-based sovereign wealth funds looking to reassess their US Treasury investments while ensuring continued exposure to the US dollar.

“We view this ETF as an alternative to long duration Treasuries,” Roubini noted. “You need a defensive strategy, but conventional defensive options may not be reliable in today’s diverse risk landscape.”

Historical Context for the Fund’s Development

The idea for the ETF originated during Trump’s first term, highlighting concerns about the US dollar’s future while aiming to foster domestic investment. Conversations continue with Gulf sovereign wealth funds about their investments in US Treasuries and the importance of maintaining US dollar exposure.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.