Economist, investor, and professor Nouriel Roubini would prefer you think of him not as his label in popular culture of “Dr. Doom” – ascribed for his worries about major structural risk in the U.S. economy – but rather, “Dr. Realist,” for seeing both sides of potential shocks. That distinction seems particularly relevant considering Roubini is now offering a way to invest in his vision of the future, with last month’s launch of the Atlas America Fund, ticker USAF.

Roubini and the team at Atlas aim to create a new type of safety trade for those who worry about inflation, currency debasement, geopolitical risk, and climate change. For 75 basis points, buyers of the fund will get exposure to precious metals, low-risk municipal securities and far-above-sea-level real estate. If you think the 60/40 portfolio is going to be stressed again as it was in 2022 when stocks and bonds both struggled, USAF may just be what the doctor ordered.

What I find somewhat ironic and possibly the biggest challenge for the fund, is its significant exposure to U.S. Treasuries. After gold, short-term bonds represent the biggest holdings in the fund. The goal is to lock in income without taking on duration risk, which Roubini believes remains elevated due to inflation risks associated with the incoming Trump administration.

The catch is, if inflation presents a problem the way Roubini expects, there are fewer scenarios in which short bonds do well: i.e. one in which the Federal Reserve can’t hike rates. If the Fed starts hiking rates, short-end yields will spike too, and those bonds in USAF will go down. Just look at 2022 when inflation roared and the Fed hiked – two of the top holdings in USAF (VGSH and UTWO) would have lost upwards of 5%.

If you’re looking for capital appreciation, it could be challenged unless the Fed is completely unable to combat inflation by hiking short-term rates. Even though it’s a less likely scenario, it makes sense that this is effectively the calculation Roubini is making: that the Fed will be handcuffed as prices erode away at the economy.

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