Investors Look to Gold, Volatility ETFs to Hedge Lingering Uncertainties

Furthermore, the election cycle is in full steam in Europe, potentially raising political risks as well in the year ahead.

Consequently, investors may turn to gold and volatility-related investments to help stave off potential turns in the marketplace. For instance, 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.

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.

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.

Additionally, traders may be interested in short-dated VIX ETP exposure, such as the REX VolMAXX Long VIX Weekly Futures Strategy ETF (BATS: VMAX) and the REX VolMAXX Inverse VIX Weekly Futures Strategy ETF (BATS: VMIN) to gain exposure to VIX up and down movements, respectively, as a way to hedge market volatility. The VolMAXX funds have a target weighted average time to expiration of less than 30 days by accessing VIX weekly futures, unlike other ETP options that utilize monthly contracts.

For more information on alternative investments, visit our alternatives category.