S&P launches new index simulating returns of gold-hedged strategy

By Marisa Wong

Milwaukee, Dec. 3 - Standard & Poor's announced the launch of the S&P 500 Gold Hedged Index.

S&P has also licensed UBS to create and launch investment products based on the new gold-hedged index.

"In a gold-hedged strategy, investors are seeking to eliminate the risk of U.S. dollar fluctuations and are therefore willing to sacrifice potential currency gains against gold," said Liz Taxin, director of strategy indexes at S&P, in a news release.

"By holding long gold futures contracts, investors stand to gain when the U.S. dollar loses value as expressed in the dollar price of gold."

The new index is calculated as a combination of a long S&P 500 position overlaid with a long position in Comex gold futures. The hedge only protects against adverse movements in the relative value of the dollar, not against stock market.

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