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Gold Hedged Equity ETF (GHS) Hits New 52-Week High

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For investors seeking momentum, REX Gold Hedged S&P 500 ETF is probably on radar now. The fund just hit a 52-week high and is up nearly 23.1% from its 52-week low price of $25.27/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

GHS in Focus

This is an actively managed fund and does not track any index. It offers access to gold without reducing allocation to U.S. large cap equities. The fund couples the returns of the S&P 500 Index and gold futures contracts by tracking the S&P 500 Dynamic Gold Hedged Index. This provides a portfolio with notional exposure to an amount of gold with value approximately equal to 100% of the value of the underlying stock portfolio. As a result, the fund acts as a hedging tool in uncertain markets and potentially outperform a U.S. large-cap portfolio if the value of gold increases. The product charges a higher annual fee of 48 bps compared with other large cap equity ETFs (see: all the Large Cap ETFs here).

Why the Move?

The U.S. equity market has been an area to watch lately given the escalating tension between U.S. and North Korea that shook complacency in the market. While this has unnerved investors, solid corporate earnings and improving global growth leave room for upside for stocks once tensions subside. Against such scenario, gold-hedged equity investing seems a sensible choice as it provides relatively efficient access to gold, which is considered a safe haven in times of turbulence, with the ability to invest in equities simultaneously.

More Gains Ahead?

The fund might remain strong given a high weighted alpha of 11.19% and a low 20-day volatility of 10.40%. As a result, there is still some promise for investors who want to ride on this surging ETF.

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