Only four inflation-protected ETFs lived up to their name after one of the hottest consumer price index prints in a generation.

The ProShares Inflation Expectations exchange-traded fund (ticker RINF) advanced 0.7% on Tuesday following a report that prices climbed 8.3% in August versus a year earlier, above the median estimate. The $10 million Ionic Inflation Protection ETF (CPII) rose 0.5%, while the Direxion Daily TIPS Bear 2x Shares ETF (TIPD) gained 0.6%. Meanwhile the PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (LTPZ) eked out a less than 0.1% gain.

Those were the sole advancers among the 25 inflation-protected ETFs tracked by Bloomberg, underscoring the difficulty in trying to buffer against sky-high pricing pressures even as issuers flood the market with products promising exactly that. With inflation readings near four-decade highs, many of the ETFs have slumped this year given that most hold Treasury Inflation-Protected Securities or TIPS. These securities have been weighed down by relatively contained breakeven inflation rates, a measure of the difference between fixed-rate and inflation-protected securities.

RINF outperforms after surprisingly strong inflation data

However, given that funds such as RINF and LTPZ track longer-dated securities, they were largely spared from the selloff that engulfed the shorter-duration debt as traders braced for the possibility of a 100-basis point hike from the Federal Reserve next week.

“With an aggressive Fed and central bank credibility, breakevens have not really widened despite high inflation prints,” said Subadra Rajappa, Societe Generale’s head of US rates strategy. “Most of the move was in the front-end with the market pricing in more aggressive Fed rate hikes at upcoming meetings.”

RINF has returned more than 8% so far in 2022, one of the best-performing inflation-protected ETFs this year, Bloomberg data show. The $28.7 billion iShares TIPS ETF (TIP) -- the category’s largest fund -- has lost over 9%.

This article was provided by Bloomberg News.