Navigating Inflation with WisdomTree Inflation Plus Fund: A Closer Look
Published July 29, 2025
Behnood Noei, CFA
Director, Fixed Income
Key Takeaways
- In today’s environment where inflation uncertainty is rampant, the WisdomTree Inflation Plus Fund (WTIP) offers a timely, multi-asset strategy combining TIPS, commodity futures, precious metals and Bitcoin to provide forward-looking inflation protection.
- WTIP's capital-efficient structure and momentum-driven commodity strategy help enhance return potential and diversification, outperforming major benchmarks in its first month since launch.
- For fixed income investors, WTIP offers a differentiated way to hedge inflation while gaining controlled exposure to non-traditional assets like Bitcoin within a liquid ETF format.
In today's environment of ongoing inflation and policy uncertainty, traditional inflation hedges are being put to the test. That's where the newly launched WisdomTree Inflation Plus Fund (WTIP) comes in. As my colleagues outlined in an earlier post, "Introducing the WisdomTree Inflation Plus Fund: A Holistic and Adaptive Inflation Hedge," WTIP is built to offer flexible, forward-looking inflation protection by combining proven strategies with more innovative ones. Its goal is to help investors weather a range of inflationary scenarios, both expected and unexpected, while aiming to preserve purchasing power, maintain diversification and support strong risk-adjusted returns. In this post, we'll take a closer look at how WTIP is structured, why it stands out as a comprehensive inflation hedge and how it may fit within a fixed income investor's broader portfolio.
A Holistic Approach to Inflation Protection
WTIP takes a thoughtful, multi-asset approach to tackling inflation risk. At the heart of the strategy are two key building blocks: TIPS and commodity futures. TIPS help protect against expected inflation, with payments that adjust based on changes in the Consumer Price Index (CPI). To round that out, the Fund also includes exposure to commodity futures, an asset class that's historically helped during unexpected inflation spikes, like those caused by supply chain disruptions or sudden economic shifts. By combining these two elements, WTIP aims to offer a more complete and flexible inflation hedge than strategies that rely on just one type of asset.
Beyond its core holdings, WTIP includes some smart structural features that help it work harder for investors. By layering commodity futures on top of a TIPS portfolio, the Fund takes a capital-efficient approach, giving exposure to both asset classes without needing extra capital. This setup helps increase return potential relative to the capital invested.
Instead of sticking with a traditional long-only commodity strategy, WTIP uses a rules-based, multi-factor approach. About 80% of the commodity allocation is actively managed through long and short positions, guided by momentum signals. This lets the portfolio adjust in real time to shifting market trends and economic regimes. On top of that, 15% is allocated to long-only positions in gold and silver, 7.5% each, providing a stable anchor in assets that have historically held up well during inflationary periods.
To further diversify and tap into non-traditional inflation hedges, WTIP can allocate up to 5% of its portfolio to Bitcoin Exchange Traded Products (ETPs), guided by a risk-aware, momentum-based model. Bitcoin is increasingly viewed as a potential hedge against monetary debasement and the erosion of fiat currency value. This allocation offers institutions a thoughtful and controlled way to gain exposure to digital assets within a structured investment framework.
In terms of portfolio composition, for every $100 invested, about $85 goes into TIPS, $10 into short-term collateral (cash), and $5–$10 into Bitcoin ETPs. On top of that, another $95 in exposure comes from a diversified basket of commodity futures, layered over the core holdings. Altogether, this creates a total economic exposure of around $195, combining diversified sources of potential return with inflation protection, all packaged in a liquid, transparent ETF format.
Performance since Inception
The Fund's distinctive multi-asset approach, especially its allocation to Bitcoin ETPs, has been a key driver of performance in the first month since launch. WTIP has outperformed both the Bloomberg U.S. Aggregate Index and the Bloomberg Commodity Index by 72 and 35 basis points, respectively.
Figure 1: Growth of $100
Source: WisdomTree, Bloomberg, as of 7/15/25. You cannot directly invest in an index. The performance data quoted represents past performance and is not indicative of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the most recent month-end and standardized performance and to download the respective Fund prospectuses, click here.
Integrating WTIP into a Fixed Income Portfolio
For fixed income investors, WTIP offers more than just inflation protection. Its multi-asset design: blending TIPS, commodities, precious metals and Bitcoin aims to deliver a broad inflation hedge, while also enhancing diversification and risk-adjusted return potential compared to a traditional fixed income-only portfolio. Commodities, for instance, have historically shown low correlation with both the Bloomberg U.S. Aggregate Index and TIPS, making them a valuable addition for investors looking to diversify their portfolio even more.
Figure 2: 5-Year Rolling Correlation
Source: WisdomTree, Bloomberg, as of 6/30/25. You cannot directly invest in an index.
Also, as mentioned earlier, adding Bitcoin brings a valuable layer of diversification to the Fund. Bitcoin is gaining traction as a potential store of value, and its price behavior, especially after "Liberation Day," has shown how it can move independently from traditional bonds and stocks. For institutions looking to explore digital assets in a thoughtful, risk-managed way, WTIP offers a practical and well-structured entry point.
A Next-Generation Solution for Prudent Investors
In conclusion, the WisdomTree Inflation Plus Fund (WTIP) marks a meaningful step forward in how fixed income investors can approach inflation protection. It goes beyond traditional strategies by offering a modern, factor-driven, multi-asset approach. By combining TIPS with dynamic exposure to commodities, and long-term stores of value like gold, silver and Bitcoin, WTIP is built to navigate a wide range of inflation scenarios.
For prudent investors, WTIP can be more than just an inflation hedge. It can also be a valuable portfolio diversifier. With its systematic approach to capturing upside and managing downside, through momentum signals and roll optimization, alongside its diversified design, it stands out as a flexible and forward-looking tool for today's evolving macro environment.
Important Risks Related to this Article
There are risks associated with investing, including the possible loss of principal. TIPS can provide a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation-protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Fixed income securities are subject interest rate, credit, inflation and reinvestment risks. Generally, as interest rates rise, the value of fixed income securities falls. The value of commodities and commodity-linked derivative instruments typically is based upon the price movements in other asset classes. An active trading market may not exist for certain commodities. Generally, derivatives are sophisticated investments that may pose risks that are different from or greater than those posed by investing directly in the underlying reference asset. The Fund is subject to risks related to rolling futures contracts. The price of futures contracts further from expiration may be higher (“contango”) or lower (“backwardation”), which can impact the Fund’s returns. Because of the frequency with which the Fund expects to roll futures contracts, the impact of such contango or backwardation may be greater than the impact would be if the Fund experienced less portfolio turnover. An investment in bitcoin ETPs involves significant risks and may not be suitable for all shareholders. Extreme volatility of trading prices that many digital assets, including bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
The Fund does not invest in Bitcoin directly.
There are risks associated with investing, including the possible loss of principal. Crypto assets, such as bitcoin and ether, are complex, generally exhibit extreme price volatility and unpredictability, and should be viewed as highly speculative assets.
Crypto assets are frequently referred to as crypto “currencies,” but they typically operate without central authority or banks, are not backed by any government or issuing entity (i.e., no right of recourse), have no government or insurance protections, are not legal tender and have limited or no usability as compared to fiat currencies. Federal, state or foreign governments may restrict the use, transfer, exchange and value of crypto assets, and regulation in the U.S. and worldwide is still developing.
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About the contributor
Behnood Noei, CFA
Director, Fixed Income
Behnood Noei serves as Director of Fixed Income at WisdomTree Asset Management, where he develops the firm’s suite of fixed income and currency exchange-traded funds and enhances existing investment processes. Behnood has 11 years investment experience in portfolio management and quantitative research. Prior to joining WisdomTree in 2022, Behnood was a portfolio manager and developer of some of the fixed income ETFs at J.P.Morgan Asset Management, where he was directly responsible for managing more than 7 Fixed Income ETFs and multiple SMAs with more than $13Billion in assets. He graduated from The Ohio State University with Master of Science degree in Finance and is a CFA charter holder.