Investments in 'reflation' trades are gaining traction.

"Reflation" trades are resurfacing.

This month, travel and leisure stocks have experienced a surge in demand, with exchange-traded funds such as (PEJ), (JETS), and (BEDZ) experiencing significant growth.

ETF Trends CEO Tom Lydon stated on CNBC's "ETF Edge" that the action is as much tied to diversification as it is to the upcoming warm weather and easing Covid-19 restrictions.

Lydon stated in a Monday interview that while there is an increase in interest rates and the threat of rising interest rates in the U.S., not all developed countries are facing this issue overseas.

He stated that individuals are shifting their investments to emerging markets, where they can earn higher returns and are less likely to be affected by central banks' hawkish policies in the U.S.

John Davi, founder and CEO of Astoria Portfolio Advisors, advised investing in inflation hedges such as the AXS Astoria Inflation Sensitive ETF (PPI) in a recent interview.

After a recession, there is usually a surge in the value of cyclical and inflation-sensitive stocks, which is why Davi, the chief investment officer and portfolio manager of his firm, created a formal inflation-sensitive model portfolio about a year and a half ago.

The ETF primarily invests in bank, energy, industrial, and material stocks, which have historically been the top-performing sectors after a recession, according to Davi. The ticker symbol is a reference to the widely followed Producer Price Index, the U.S. government's benchmark for wholesale prices.

To protect their portfolios from inflation, investors and advisors should allocate 5-10% to inflation-focused products like Davi's, according to him.

"Davi stated that CPI is 7%, but when looking globally, he sees inflation rates closer to 15%, especially in areas such as the cost of goods, grocery shopping, and home prices. As a financial advisor, he would advise examining one's portfolio and considering ways to hedge against inflation."

PPI is up nearly 5% year to date.