The Benefits of a Gold Hedge in an Equity ETF Position

Some have turned to gold as a hedge against market volatility, and a instead of taking a position in two separate assets, exchange traded fund investors can also diversify their portfolios with a kind of two-in-one gold and equity strategy.

ETF Trends publisher Tom Lydon spoke with Greg King, Founder & CEO of Rex Shares, at the Inside ETFs conference that ran Jan. 22-25, 2017 to talk about the diversifying effects of gold for a traditional equity portfolio.

“Our view is that if you look at the diversification of gold and the negative correlation right now – sometimes a little positive – but generally, prettily uncorrelated to equities,” King said. “You want to have some gold in there for the long term.”

Investors looking to gold as a way to hedge uncertainties in a capital efficient way may consider something like the actively managed REX Gold Hedged S&P 500 ETF (NYSEArca: GHS). GHS 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.