Hedging Equity Risk With Gold In One Product

An Alternative Approach to Gold Investing

Barclays’ IPath creator, Greg King, is looking to go long the S&P or the FTSE Emerging Markets and get some extra cushion from the downside by buying gold. It’s helped this year. The new founder and CEO of REX Shares has beat the iShares MSCI Emerging Markets index (EEM) — created by Barclays before selling to BlackRock — by a country mile.  The Rex Gold Hedged FTSE Emerging Markets (GHE) is up 25.7% to the MSCI EM’s 13.71%.

King’s background is in creating portfolio solutions. He created iPath for Barclays in 2006 and later moved onto become the CEO of VelocityShares three years later. Janus Capital bought them out in 2014. He also led the ETF product team at Credit Suisse and Global X Funds.

REX  has the same type of fund hedged against the S&P 500, called the Gold Hedged S&P (GHS).  “It allows investors to get that access to gold sort of over the top of an existing position so they don’t need to sacrifice that core holding,” he says.

REX puts the ETF’s assets to work by purchasing stocks, as well as gold and stock index futures, effectively making one dollar of investment do the work of two. King spoke with the RIA Channel recently to discuss how that works and why advisors might want to consider this type of strategy rolled up in a single product.