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Buy These 3 Top-Ranked Funds to Beat Inflation

The hot inflation reading has been hitting the headlines for a while now, with the Fed set to go for rate hikes to get a grip over rising commodity prices. Worries of multiple rate hikes have already dented investors’ sentiment, which is impacting markets.

Ballooning inflation has been making bulls skittish and giving hopes to bears this year. Understandably, investors will thus look to hunt for ways to fight inflation while being profitable. Thus, it would be wise to invest in funds like JHancock Real Estate Securities Fund Class 1 JIREX, MFS Global Real Estate Fund Class I MGLIX and Franklin Gold and Precious Metals Fund Advisor Class FGADX that are expected beat inflation and provide handsome returns.

Inflation Worries Rattle Markets

Rising prices have been hurting people for a while now. The annual inflation rate rose to 7.5% in the United States in January, hitting a 40-year high. Sequentially, inflation was 0.6% in January. While energy prices led to a jump, labor shortages and supply chain disruptions also impacted prices.

Rising prices have also led the Fed to tighten its monetary policy, with multiple rate hikes expected this year. Experts believe that the Fed will go for at least four hate hikes, beginning this March, in a bid to check surging inflation. The Fed’s plans of an aggressive rate hike have kept investors on the edge, taking a toll on markets, with growth stocks suffering the most. This has seen economists predict slower growth this year.

As a result, investors should look for funds that employ various investing options in order to beat inflation.

Top 3 Funds That Have Potential to Beat Inflation

Surging inflation and the Fed’s decision to go for aggressive rate hikes might hamper markets further. From an investment point of view, there are funds that gain as inflation soars, which should be compelling enough for investors to focus on right now.

Real estate is the best bet. This is due to the fact that growing inflation results in property values to scale northward. In addition, when the value of the property increases, the amount charged by landlords for rent soars as well. As a result, rental income increases. Real estate can now be purchased indirectly by investing in a real estate investment trust (REIT).

Another option is choosing funds that invest in gold mining stocks because gold in itself is considered a hedge against inflation. This is because gold does not appear to diminish in value when inflation rises. In reality, when inflation rises, demand for gold and other precious metals increases as well.

As a result, we've chosen three such funds from the aforementioned areas that are worth buying. Moreover, these funds have given impressive 3-year and 5-year annualized returns, boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), offer a minimum initial investment within $5,000 and carry a low expense ratio.

The question here is why should investors consider mutual funds? Reduced transaction costs and diversification of portfolios without the several commission charges that are associated with stock purchases are the primary reasons why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

JHancock Real Estate Securities Fund Class 1 seeks appreciation of capital and current income over the long term. JIREX invests primarily in the equity securities of companies engaged in operations related to the real estate sector, which includes REITs. JHancock Real Estate Securities Fund Class 1 invests in securities like common stocks, preferred stocks and convertible securities.

JHancock Real Estate Securities Fund Class 1 has a 3-year and 5-year annualized return of 14% and 11.1%, respectively. The annual expense ratio of 0.82% is lower than the category average of 1.08%. JIREX has a Zacks Mutual Fund Rank #1.

MFS Global Real Estate Fund Class I primarily invests the majority of its net assets in real estate-related investments in both the United States and abroad. MGLIX generally invests the majority of the fund's assets in equity securities. MFS Global Real Estate Fund Class Imay invest any amount of its assets in real estate-related investments.

MFS Global Real Estate Fund Class I has a 3-year and 5-year annualized return of 11.9% and 10.8%, respectively. The annual expense ratio of 0.98% is lower than the category average of 1.21%. MGLIX has a Zacks Mutual Fund Rank #1.

Franklin Gold and Precious Metals Fund Advisor Class aims for capital appreciation with current income being a secondary consideration. FGADX invests the majority of assets in the securities of companies that have gold and precious metals operations. Franklin Gold and Precious Metals Fund Advisor Class invests across all market capitalizations.

Franklin Gold and Precious Metals Fund Advisor Class has a 3-year and 5-year annualized return of 21.3% and 7.1%, respectively. The annual expense ratio of 0.68% is lower than the category average of 1.17%. FGADX has a Zacks Mutual Fund Rank #1.

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