The WisdomTree Inflation Plus Fund (WTIP) was built around a simple observation: inflation is not a single risk.

Some inflationary periods are driven by energy shocks. Others stem from supply-chain disruptions, fiscal stimulus, labor shortages or monetary debasement concerns. As a result, relying on a single inflation hedge may leave investors exposed when inflation evolves in unexpected ways.

WTIP was designed as a holistic inflation solution that combines multiple sources of inflation protection within a single ETF.

Solving for Expected and Unexpected Inflation

Commodities are often among the first asset classes to respond when inflation surprises to the upside. As the raw materials that underpin the global economy, higher prices for energy, industrial metals and agricultural commodities frequently feed directly into consumer prices. Historically, this has made commodities one of the most effective tools for helping investors navigate unexpected inflation.

WTIP places commodities at the heart of its investment strategy through a dynamic, rules-based commodity allocation. Rather than maintaining static exposures like traditional commodity benchmarks, the strategy systematically adjusts its commodity positioning to seek opportunities across changing market environments.

To complement its commodity exposure, WTIP also invests in Treasury Inflation-Protected Securities (TIPS), which have historically helped preserve purchasing power by adjusting principal values with changes in inflation. While commodities are designed to respond quickly to inflation shocks, TIPS can help protect against expected inflation over time.

By combining a dynamic commodity strategy with TIPS in a capital-efficient structure, WTIP seeks to provide investors with a more comprehensive inflation toolkit—one that addresses both unexpected inflation surprises and longer-term inflation expectations.

An Adaptive Commodity Long-Short Strategy

Unlike traditional commodity benchmarks that maintain static long-only exposures, WTIP employs a systematic long-short commodity framework driven by a proprietary momentum model.

The strategy evaluates 18 commodities across multiple sectors, including energy, industrial metals, grains, precious metals and soft commodities. Positioning is adjusted based on market trends, with the ability to establish both long and short exposures depending on the prevailing environment.

This flexibility is designed to help the strategy navigate periods when commodity leadership shifts and when certain sectors face prolonged weakness.

Rather than simply owning commodities, the strategy seeks to own commodities that are working while reducing exposure to those that are not.

WTIP also maintains strategic exposure to gold and silver. Historically, precious metals have served as stores of value during periods of monetary uncertainty, rising inflation expectations and declining confidence in fiat currencies. Their role within the portfolio complements the cyclical inflation sensitivity of broader commodity markets.

The strategy may allocate up to 5% to bitcoin exposure through exchange-traded products. While still an emerging asset class, bitcoin has increasingly been viewed by some investors as a digital store of value and a potential hedge against long-term currency debasement risks.

Figure 1: WTIP Commodity Allocation Framework

A Differentiated Source of Returns

One of WTIP's distinguishing characteristics is its ability to provide a differentiated source of returns within a diversified portfolio. As shown in Figure 2, the WisdomTree Inflation Plus Model has historically exhibited low correlations with traditional asset classes, including equities (-0.09), fixed income (0.15) and even broad commodities (0.07). This reflects the strategy's differentiated construction, which combines a dynamic commodity allocation with complementary exposures in a capital-efficient framework.

Figure 2: Correlation of the WTIP with Traditional Asset Classes

Conclusion

One year after its launch, WTIP has demonstrated the value of a holistic and adaptive approach to inflation investing. Since its inception on June 18, 2025, through June 17, 2026, the fund has returned 25.89%, outperforming the Bloomberg Commodity Index's (BCOM) 20.06% return by 5.83 percentage points. While one year is only an initial observation, the results illustrate how a dynamic investment process can add value over traditional, static commodity exposures.

The ETF saw major gains versus BCOM (long only) in the months of June and July 2025, with short or flat positions in most commodities, with the exception of tin, copper and natural gas, while maintaining strategic long positions in gold and silver. Aggregate net exposure of the model was -9% for 2025, helping the strategy outperform BCOM by more than 11% for the calendar year. The bitcoin momentum model was successful in protecting against the sharp fall in crypto assets, reducing net exposure to under 60% (of the 5% allocation) over the one-year period, importantly reducing exposure in months experiencing the sharpest falls from Oct 2025 to April 2026.

Looking ahead, the investment landscape remains characterized by persistent inflation uncertainty, evolving geopolitical risks and shifting commodity market leadership. In such an environment, investors may benefit from moving beyond conventional commodity allocations toward strategies that can adapt as market conditions change.

WTIP was designed with this objective in mind. By combining a dynamic long-short commodity strategy with complementary exposures to TIPS, precious metals and bitcoin exposure, the fund seeks to provide a more comprehensive approach to inflation protection while also serving as a differentiated source of portfolio returns. As its first year has shown, adapting to changing market dynamics can be just as important as maintaining exposure to the asset class itself.

Figure 3: Performance Comparison