In the current environment of elevated inflation uncertainty and policy asymmetry, traditional inflation hedges are being re-evaluated. WisdomTree Senior Economist Jeremy Siegel has long argued stocks offer the best long-term inflation hedge because companies often pass along price increases to consumers and see profits and earnings growth with inflation.

Elevated inflation has its biggest impact on traditional nominal bond portfolios that offer fixed coupon payments. With this new market backdrop and fears of debt, deficits and inflation risk, WisdomTree sought to create a new overlay strategy designed to better navigate evolving inflationary regimes. Today, WisdomTree launched the WisdomTree Inflation Plus Fund (WTIP), a modern, multi-asset ETF designed to provide adaptive inflation protection through a blend of TIPS, long-short commodities futures, precious metals and investments that provide exposure to Bitcoin.

WTIP offers a differentiated, multi-asset approach to mitigating inflation risk by combining time-tested instruments such as U.S. TIPS (Treasury Inflation-Protected Securities) with systematic commodity futures strategy, long-term store-of-value precious metals like gold and silver and emerging store-of-value assets like bitcoin.

This construct provides investors with broad-based inflation and purchasing power protection—targeting both expected and unexpected inflation, while maintaining diversification and risk-adjusted return potential.

WTIP employs a capital-efficient structure by overlaying commodity futures on top of a TIPS portfolio, allowing simultaneous exposure to both asset classes without requiring additional capital outlay. This design enhances return potential per unit of capital deployed, making it well-suited for adding strategies like commodities on top of traditional asset classes like bonds.

Strategic Framework: Complementary Inflation Hedges

The core architecture of the ETF is built around two primary inflation-sensitive exposures:

• Treasury Inflation-Protected Securities (TIPS): These offer explicit protection against expected inflation, with principal and coupon payments indexed to CPI, forming the foundation of many institutional real-return allocations.
• Commodity futures exposure: Commodities have historically served as a hedge against unexpected inflation, particularly during supply shocks and cyclical upswings. However, static long-only exposure has delivered inconsistent returns and high volatility in recent decades.

By combining these two components, the Fund provides a more comprehensive and flexible hedge than single-asset strategies.

Structural Innovation: Evolving Commodity Exposure

Recognizing the structural shortcomings of traditional long-only commodity allocations—such as negative roll yield, volatility clustering and prolonged drawdowns—WTIP adopts a multi-factor, rules-based approach to commodity investing:

• 80% of the commodities allocation is dynamically managed across long and short positions based on momentum signals, enabling the portfolio to adapt to prevailing market trends and regime shifts.
• Enhanced roll optimization is employed to minimize carry costs and maximize roll efficiency.
• 15% of the commodity sleeve is allocated to long-only gold and silver positions (7.5% each), anchoring the portfolio in historically resilient inflation-sensitive assets.

This marks an important evolution in institutional commodity investing—replacing static exposure with active signals and systematic factors, while maintaining transparency and liquidity.

Incorporating Emerging Diversifiers: Bitcoin Exchange Traded Products (ETPs) Allocation

To further enhance diversification and introduce exposure to non-traditional inflation-hedging assets, WTIP can allocate up to 10% in bitcoin ETPs, driven by a risk sensitive momentum model. Bitcoin is increasingly regarded as a potential hedge against monetary debasement and fiat dilution.

For institutions seeking exposure to digital assets within a structured framework, this allocation provides a measured and risk-aware entry point.

Portfolio Composition Overview

WTIP's risk-managed real asset allocation is structured as follows:

• Cash component: For every $100 invested, roughly $10 is kept in short-term collateral that earns returns comparable to U.S. Treasury bills
• TIPs exposure: For every $100 invested, roughly $85 is invested in a laddered portfolio of Treasury Inflation-Protected Securities
• Bitcoin related exposure: For every $100 invested, roughly $5 and up to $10 are invested in Bitcoin ETPs
• Commodity exposure: To help magnify the benefits of the asset allocation, roughly $95 in a diversified basket of commodity futures is layered on top for a total exposure of $195

This structure balances systematic alpha sources with macroeconomic hedging characteristics, in a liquid and transparent ETF wrapper.

Conclusion: A Next-Generation Inflation Solution

WTIP reflects a new paradigm in inflation protection—one that acknowledges the limitations of legacy strategies and responds with a modern, factor-informed and multi-asset solution. It offers:

• A comprehensive hedge across inflation scenarios
• Exposure to both traditional and emerging real assets
• Systematic upside capture and downside mitigation via momentum and roll optimization
• Diversification beyond static long-only commodities beta

As the global macro backdrop continues to evolve, inflation-aware portfolio construction demands precision, innovation and flexibility—qualities embedded in the design of this ETF.