Direxion has expanded its range of leveraged products with the launch of the Direxion Daily 5G Communications Bull 2X Shares (TENG US) and the Direxion Daily Travel & Vacation Bull 2X Shares (OOTO US).
Dave Mazza, Managing Director at Direxion.
Listed on NYSE Arca, the thematic funds seek to achieve 200% of the daily performance of BlueStar 5G Communications Index and BlueStar Travel and Vacation Index respectively.
Dave Mazza, Managing Director at Direxion, said: “2021 continues to offer opportunities for traders to take advantage of emerging trends, including the economic reopening boosting demand for travel and vacation, along with the growth of 5G networks.
“These leveraged ETFs allow traders to take a bold position in two early-stage themes.”
The funds each come with a net expense ratio of 1.07%.
5G Communications
The BlueStar 5G Communications Index consists of a tiered, modified market capitalization-weighted portfolio of US-listed equity securities, including depository receipts, of companies whose products and services are economically tied to 5G networking and communication technologies.
Securities are identified for inclusion via a screening process that reviews descriptions of a company’s primary business activities in regulatory filings, analyst reports and industry-specific trade publications for indications of companies’ economic ties to 5G networking and communication technologies.
Once identified, companies are assigned to one of four categories: one, companies that provide core cellular network equipment such as carrier-grade routers, antennas, or other equipment or semiconductors used in 5G networks; two, companies organized as cellphone tower or data center REITs, mobile network operators or providers of optical fiber cables; three, companies that provide hardware and software for mobile network operators and media companies or network testing and bandwidth optimization equipment, and, four, companies that provide enhanced mobile broadband modems capable of increased bandwidth for end-user devices or infrastructure or cloud-based services supporting REITs or mobile network operators.
At each rebalance date, the first category is assigned an aggregate weight of 40% in the index with individual companies limited to 5% and any excess weight reallocated to companies in the category with a weight below 5%; the second category is assigned an aggregate weight of 30% with individual companies limited to 3% and any excess weight reallocated; the third category is assigned an aggregate weight of 15% with individual companies limited to 3% and any excess weight reallocated, and the fourth category is assigned an aggregate weight of 15% with individual companies limited to 1% and any excess weight reallocated.
Companies included in the index must have a market capitalization of at least $150 million, except for REITs and mobile network operators which must have market capitalizations of at least $1 billion, and must meet certain liquidity, free-float and trading cost thresholds.
The index is rebalanced and reconstituted semi-annually. To reduce turnover, existing Index components will not be removed from the index solely for not meeting the minimum market capitalization or liquidity criteria unless they do not meet such requirements for two consecutive reconstitutions.
As of May 28, 2021, the index consisted of 75 constituents, which had a median total market capitalization of $15.3bn, total market capitalizations ranging from $389m to $2.1 trillion. Notable positions included Ericsson (4.99%), Nokia (4.93%), Qualcomm (4.71%), Analog Devices (4.39%) and Xilinx (4.05%).
Travel and Vacation
The BlueStar Travel and Vacation Index is composed of US-listed stocks, including depository receipts, of companies that are defined as travel and vacation companies.
To be eligible for inclusion in the index, a company must either (a) derive 25% or more of its revenue from, or devote 25% or more of its annual budget to, operating theme parks and/or hotels or (b) derive 50% or more of its revenue from, or devote 50% or more of its annual budget to the following activities: hotel accommodations, commercial airlines, casino resorts, hotel timeshares, ski resorts, cruises, hotel REITs, performing arts centres, online travel and event booking, specialty travel and experiences and the operation of theme parks.
Stocks must have a free-float percentage greater than 10%, a float-adjusted market capitalization of at least $1bn, a six-month average daily value traded of at least $2m; and a 20-day average bid-ask spread less than 1%.
Constituents are weighted by free-float market capitalization subject to any one category of travel and vacation being limited to 20% of the index. The index is reviewed semi-annually and rebalanced quarterly. To reduce turnover, existing components will not be removed from the index solely for not meeting the above criteria unless they do not meet such criteria for two consecutive rebalance periods.
As of May 28, 2021, the index comprised 51 constituents with a median total market capitalization of $7.9bn, total market capitalizations ranging from $2bn to $325bn. Notable positions included Booking Holdings (5.41%), Walt Disney (5.33%), Marriott International (4.84%), Hilton Worldwide (4.73%), and Southwest Airlines (4.62%).