In a post-Brexit world, many have included a gold hedge to diminish further swings from more volatile equity exposure. On the other hand, investors can turn to a single exchange traded fund strategy that implements full exposure to gold and equities simultaneously.
On an upcoming webcast, Revealed: A Full Gold and Equities Exposure Strategy, Guy Adami, Director at Private Advisor Group, Will McGough, Senior Vice President and Portfolio Manager at Stadion Money Management, and Greg King, Founder and CEO of REX Shares, will go over an innovative institutional strategy that pairs core investments with a gold hedge through an easy-to-use ETF wrapper.
Specifically, the actively managed REX Gold Hedged S&P 500 ETF (NYSEArca: GHS) and the REX Gold Hedged FTSE Emerging Markets ETF (NYSEArca: GHE) allow investors to access exposure to gold without diminishing their equity allocations, essentially providing investors a two-in-one, gold-and-stock position in an ETF wrapper.
Related: Why Gold ETFs can Keep Surging
The gold hedging strategy helps investors diversify an investment portfolio. The hard asset helps hedge currency risk in case of a depreciating U.S. dollar, diversifies a portfolio against unpredictable markets and shields a portfolio from potential financial tail events in more riskier developing economies.
However, retail investors who want to implement a gold hedge would typically have to allocate a portion of their wealth to physical gold bullion.
Alternatively, the gold-hedged stock ETFs help investors tap into a so-called gold overlay strategy, which institutional investors have been using for decades. The approach pairs a core investment, like stocks, with a portfolio hedge applied through derivatives, or in this case, gold futures contracts.
Gold has acted as a portfolio diversifier, especially in a post-Brexit world where volatility remains elevated. The U.S. dollar is also in a tough spot because the Federal Reserve has yet to raise interest rates this year and does not appear likely to do so.
“The general bullish sentiment for gold coupled with the post-Brexit uncertainty continues to underpin the metal and the complex as a whole,” MKS Group trader James Gardiner said, according to Reuters.
Financial advisors who are interested in learning more about a gold-hedged equity strategy can register for the July 12 webcast here.