Direxion unveils ‘Relative Weight’ ETF suite

Jan 17th, 2019 | By | Category: ETF and Index News

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Direxion has unveiled a new suite of ETFs on NYSE Arca that use a relative weight methodology.

Dave Mazza, Managing Director and Head of Product of Direxion

Dave Mazza, Managing Director and Head of Product at Direxion.

The range consists of ten long/short ETFs, separated into five pairs designed around common investment themes. Each pair captures both sides of an expressed view – for example, that value will outperform growth or vice-versa.

The underlying indices, provided by FTSE Russell and MSCI, achieve this through a 150% long component and 50% short component, resulting in a net exposure of 100% of assets. The ETFs provide relative outperformance if the long component outperforms the short component, and then also reward an investor when a macro view is correct.

The Direxion Russell 1000 Value Over Growth ETF (RWVG US) tracks the Russell 1000 Value/Growth 150/50 Net Spread Index, taking a 150% long position in the Russell 1000 Value Index and a 50% short position in the Russell 1000 Growth Index. Its expense ratio is 0.46%. The converse fund in the pair is the Direxion Russell 1000 Growth Over Value ETF (RWGV US) which tracks the Russell 1000 Growth/Value 150/50 Net Spread Index. Its expense ratio is 0.46%.

The Direxion Russell Large Over Small Cap ETF (RWLS US) tracks the Russell 1000/Russell 2000 150/50 Net Spread Index, taking a 150% long position in the Russell 1000 Index and a 50% short position in the Russell 2000 Index. Its expense ratio is 0.46%. The converse fund is the Direxion Russell Small Over Large Cap ETF (RWSL US) which tracks the Russell 2000/Russell 1000 150/50 Net Spread Index. Its expense ratio is 0.47%.

The Direxion MSCI Cyclicals Over Defensives ETF (RWCD US) tracks the MSCI USA Cyclical Sectors – USA Defensive Sectors 150/50 Return Spread Index, taking a 150% long position in the MSCI USA Cyclical Sectors Index and a 50% short position in the MSCI USA Defensive Sectors Index. Its expense ratio is 0.45%. The converse fund is the Direxion MSCI Defensives Over Cyclicals ETF (RWDC US) which tracks the MSCI USA Defensive Sectors – USA Cyclical Sectors 150/50 Return Spread Index. Its expense ratio is 0.45%.

The Direxion MSCI Emerging Over Developed Markets ETF (RWED US) tracks the MSCI Emerging Markets IMI – EAFE IMI 150/50 Return Spread Index, taking a 150% long position in the MSCI Emerging Market Index and a 50% short position in the MSCI EAFE IMI Index. Its expense ratio is 0.58%. The converse fund is the Direxion MSCI Developed Over Emerging Markets ETF (RWDE US) which tracks the MSCI EAFE IMI – Emerging Markets IMI 150/50 Return Spread Index. Its expense ratio is 0.52%.

The Direxion FTSE Russell US Over International ETF (RWUI US) tracks the Russell 1000/FTSE All-World ex-US 150/50 Net Spread Index, taking a 150% long position in the Russell 1000 Index and a 50% short position in the FTSE All-World ex-US Index. Its expense ratio is 0.46%. The converse fund is the Direxion FTSE Russell International Over US ETF (RWIU US) which tracks the FTSE All-World ex-US/Russell 1000 150/50 Net Spread Index. Its expense ratio is 0.55%.

Dave Mazza, Managing Director and Head of Product of Direxion, commented, “You can overweight growth if you believe it’s going to outperform the market. But, for some investors, that only captures half of their view. If growth beats the market, then it obviously beats value by even more. The beauty of these funds is they allow you to extend your viewpoint to the short side to seek additional returns. Your view is no longer mismatched with the fund – the fund is now designed to match your view.”

Rob Nestor, President and Head of Direxion, added, “Currently, most investors are only able to overweight or underweight to the long-side. Now they can access returns from the short side and fully capture their expressed view. What’s more, they can do so with one simple product, without net leveraged exposure.”

Direxion has traditionally been known as a provider of tactical trading funds, primarily through the firm’s extensive line-up of inverse and leveraged ETFs. The latest funds, however, mark the firm’s first products aimed at thematic investors.

“Today’s launch marks a clear inflection point for the firm,” said Nestor. “The Relative Weight ETF suite represents a logical expansion of our core expertise by providing precise and highly directed exposures. Our focus is now much broader than just highly tactical trading.”

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