NEW YORK (HedgeWorld.com)–Mutual fund manager Rydex Global Investors launched on April 30 an exchange-traded fund that tracks an equal-weight version of the Standard & Poor’s 500 stock index, providing a new choice for hedging market risk.
The underlying index, developed by Standard & Poor’s in cooperation with Rydex and introduced in January, has the same constituents as the traditional S&P 500. But it avoids concentration in large-cap companies and has greater sector diversification as well as broad exposure to the market.
Its performance does not exactly parallel the traditional S&P, said Chuck Tennes, Rydex portfolio director. The equal weight index underperformed the traditional measure for the first quarter of this year but has outperformed during the April rally. Some of these differences are predictable, said Mr. Tennes.
“This provides a different point of view for the investor,” he remarked. “Fund managers that want to short the S&P in order to hedge market exposure will have a choice between the capitalization-weighted and equal-weighted versions. They can be more precise.”