Asia Index Private Limited, a joint venture between S&P Dow Jones Indices and BSE, today announced the launch of the S&P BSE SENSEX Gold Hedged Index and S&P BSE SENSEX Dynamic Gold Hedged Index. These indices can serve as the basis of investment products such as ETFs that allow investors to benefit from the returns of the Indian equity market while hedging against a decline in the value of the Indian rupee versus gold.
The S&P BSE SENSEX Gold Hedged Index and S&P BSE SENSEX Dynamic Gold Hedged Index are designed to simulate the total returns of S&P BSE SENSEX with a hedge against the fluctuations of the Indian Rupee against gold. The hedge only protects against adverse movements in the relative value of the Indian rupee, as expressed in the rupee price of gold. Stock market risk is not hedged in any way.
The S&P BSE SENSEX Gold Hedge is calculated as a combination of a long S&P BSE SENSEX total return position and Gold Mini futures contracts on the Multi Commodity Exchange of India (MCX).
“As the Indian market is maturing, investors are seeking more innovative products that are designed to offer their own risk premia. Historically, gold and equities noted no correlation or very low correlation with each other. S&P BSE Gold Hedged indices are designed to provide gold exposure to the portfolio in a more capital efficient way,” said Alka Banerjee, CEO of Asia Index Private Limited
“We are excited to launch the S&P BSE Gold Hedge indices for our investors who are looking for more sophisticated products. This first-of-its-kind of index launched in India offers investors reaping a dual benefit of going long on Indian stock market bellwether, Sensex and hedging the fluctuation in Indian Rupee by taking position in Gold Mini futures contracts,” said Ashishkumar Chauhan, MD & CEO, BSE Ltd.
The S&P BSE SENSEX Gold Hedged Index is rebalanced monthly, during the one-day roll of the gold futures contracts to equalize notional exposure to equity and gold. The S&P BSE SENSEX Dynamic Gold Hedged Index is rebalanced monthly during the five-day roll of the gold futures contracts to adjust the notional exposure of equity and gold.
The S&P BSE SENSEX Gold Hedged Index and S&P BSE SENSEX Dynamic Gold Hedged Index are part of the S&P BSE strategy indices family.