Direxion unveils nanotechnology ETF

Nov 24th, 2021 | By | Category: Latest news

Direxion has introduced a new thematic equity ETF in the US providing exposure to companies involved in nanotechnology.

Direxion launches nanotechnology thematic ETF

Nanotechnology refers to the manipulation of matter on a near-atomic scale.

The Direxion Nanotechnology ETF (TYNE US) has been listed on NYSE Arca and comes with an expense ratio of 0.65%.

Nanotechnology refers to the manipulation of matter on a near-atomic scale in order to engineer new structures, devices, and systems.

Some of the most exciting, and most publicized, applications of nanotechnology are happening within the healthcare sector. Nanotechnology is helping to improve drug-delivery systems, leading to much more targeted treatments for cancer, heart disease, diabetes, and other age-related illnesses.

Nanotechnology could also be used to stimulate the growth of certain nerve cells, a process that could revolutionize the treatment of patients with brain damage or spinal cord injuries.

Yet the potential of nanotechnology stretches well beyond the medical sphere. Examples of current or expected future applications include improving food security by using nanoscale sensors to detect salmonella and other contaminants; reducing costs in the electronics industry by enabling the development of ever more miniaturized circuits; advancing clean energy by enhancing the efficiency of solar panels and rechargeable batteries; improving textiles by using nanoscale additives to prevent staining, wrinkling, and bacteria growth, and augmenting cosmetics with nanoscale additives that improve coverage, absorption, and cleansing.

David Mazza, Managing Director, Head of Product at Direxion, said: “Investors continue to seek exposure to disruptive industries, but one important area they may not yet fully appreciate is nanotechnology. Nanotech is used today in a wide variety of businesses ranging from agriculture to biotech, defense, energy, and semiconductors. With this innovation, materials can be made stronger, lighter, more durable, and more reactive, helping to reduce costs and increase productivity.”

Methodology

The ETF is linked to the S&P Kensho Extended Nanotechnology Index which has been created by index operator S&P Dow Jones Indices in collaboration with Kensho Technologies, a provider of next-generation analytics, machine learning, and data visualization systems. Kenso is owned by S&P DJI parent, S&P Global.

The index selects its constituents from a universe of US-listed stocks, including American Depository Receipts, of companies with market capitalizations greater than $100 million and average daily trading volumes above $1 million.

Kensho leverages its expertise in artificial intelligence to analyze large amounts of publicly available company data in order to identify firms that are tied to the nanotechnology theme. Kensho identifies both ‘core’ and ‘non-core’ companies based on the prominence of keywords in regulatory filings.

Specifically, the process seeks to identify four types of companies: those that develop machines and systems enabling the manipulation of matter at the molecular level, those that provide services of measuring at the molecular level, those that are manufacturing nanoscale materials and products, and those that are developing systems enabling the delivery of nanomaterials to targeted locations.

Constituents are provisionally assigned an equal weight which is then adjusted to increase the index’s exposure to ‘core’ companies while accounting for liquidity constraints and capping the cumulative weight of companies with weights above 4.5% at 45%. The index is reconstituted annually and rebalanced on a semi-annual basis.

As of 12 November, the index contained 29 constituents. Nearly three-quarters (72.8%) of the index weight was allocated to health care stocks with the next-largest sector exposures being information technology (18.1%) and industrials (5.3%).

Notable positions included Arcturus Therapeutics (11.7%), Bruker BioSciences (8.8%), Beam Therapeutics (8.7%), Nano Dimension (6.3%), Moderna (5.0%), Intellia Therapeutics (4.7%), BionTech (3.6%), Thermo Fisher Scientific (3.6%), and Alkermes (3.6%).

Direxion’s archrival, ProShares, unveiled a nanotechnology ETF just a few weeks ago. Its fund, the ProShares Nanotechnology ETF (TINY US), tracks the Solactive Nanotechnology Index and comes with a net expense ratio of 0.58%. TINY is also listed on NYSE Arca.

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