Asia Index launches S&P BSE Gold Hedged indices

Leading index provider Asia Index today launched two new indices to help investors benefit from returns of the country's equity market while hedging against a decline in the value of 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 fluctuations of the Indian rupee versus gold.
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 Multi Commodity Exchange of India (MCX).

"The indices are designed to measure the returns of an investment strategy which is long on the Sensex and hedged against changes in the Indian rupee versus gold," Asia Index CEO Alka Banerjee told reporters here.
"They (indices) allow to keep the position in Sensex intact and take position in gold futures market. This provides gold exposure to an investor's portfolio in a more capital efficient way," she said adding that historically, gold and equities have noted low correlation with each other.
The indices can generate up to 20 per cent in returns.

According to Asia Index, which is a BSE and S&P Dow Jones Indices joint venture, 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 anyway," it added.
Banerjee said "the S&P BSE Sensex Gold hedge indices were recently launched in the United States and we thought it would suit India as well".
The indices would be rebalanced on a monthly-basis.