Direxion, the second-largest issuer of inverse and leveraged exchange traded funds, continues expanding its lineup of non-leveraged funds with three new products launched Wednesday, including two dividend ETFs.
All three of the new Direxion ETFs were launched in partnership with Value Line, the independent investment research firm famous for the Value Line Investment Survey. The Value Line Investment Survey uses “proprietary quantitative ranking systems to rate stocks,” according to Direxion.
The Direxion Value Line Conservative Equity ETF (NYSEArca: VLLV) tracks the Value Conservative Equity TR Index (VLCET), which is based on Value Line’s proprietary safety rank. The Safety rank measures the total risk of a stock and its defensive capability during an overall equity market downturn relative to the other stocks in the Value Line universe, according to Direxion.
The equal-weight VLLV is home to 140 stocks with sector allocations of nearly 19% to healthcare, 17.2% to consumer staples and 13.2% to technology. Top 10 holdings include Apple (NasdaqGS: AAPL), Boeing (NYSE: BA) and Starbucks (NasdaqGS: SBUX). Over 91% of VLLV’s holdings are large-caps with the remainder of the new fund’s weight allocated to mid-caps.
The Direxion Value LineMid- and Large-Cap High Dividend ETF (NYSEArca: VLML) tracks the Value LineMid- and Large-Cap High Dividend Yield TR Index (VLMLT). That index targets stocks with above-average payouts while looking to avoid highly volatile names.
Some dividend ETFs are well-positioned to help investors fight rising interest rates and VLML joins that group with heavy exposure to cyclical sectors that historically perform well in rising rate environments. For example, the new ETF devotes a combined 53% of its weight to the materials, consumer discretionary, technology and industrial sectors. [Dividend ETFs for Rising Rates]
VLML’s top 10 holdings include HollyFrontier (NYSE: HFC), BP (NYSE: BP), Texas Instruments (NasdaqGS: TXN) and Dow Chemical (NYSE: DOW).
The Direxion Value Line Small- and Mid-Cap High Dividend ETF (NYSEArca: VLSM) is benchmarked to the Value Line Small- and Mid-Cap High Dividend Yield TR Index (VLSMT). Like VLML, VLSM emphasizes above-average dividend payers that sport favorable risk profiles.
VLSM is heavy on financials services stocks with nearly 44% of the new ETF’s weight allocated to that sector. Materials and energy names combine for 24.5% of VLSM’s weight. The new ETF is more of mid-cap fund with 84.5% of its portfolio allocated to those stocks with the rest going to smaller stocks.
“Dividend-yielding and defensive stocks have been a mainstay for long-term investors. Value Line has offered data and research for over eight decades to help individual stock investors build portfolios with improved risk-adjusted returns. Combined with Direxion’s robust ETF platform and product development expertise, the new ETFs allow easy access to strategies from which investors may benefit,” said Direxion in a statement.
Direxion has been rapidly expanding its lineup of non-leveraged ETFs, which now includes the fast-growing, five-star rated Direxion All Cap Insider Sentiment Shares (NYSEArca: KNOW), Direxion S&P 500 Volatility Response Shares (NYSEArca: VSPY) and the Direxion Zacks MLP High Income Shares (NYSEArca: ZMLP). [Betting on Insiders With an ETF]
Each of the three funds launched by Direxion today charge 0.58% per year.
VLML Weighting Data
Charts Courtesy: Direxion