As a way to meet the growing demands of investors, Direxion has shifted to more buy-and-hold ETF offerings through its latest round of launches to help people craft a better core investment portfolio.
“As we continue to diversify our lineup, we want to look for solutions for investors to use in their portfolios. It can be more buy-and-hold – I think we’re best known as tactical traders, but now we’re entering in more of a buy-and-hold space,” David Mazza, Managing Director, Head of Product, Direxion, said at the Inside ETFs conference.
Earlier this year, Direxion launched three new ETFs today as part of an acceleration of fund offerings to help long-term buy-and-hold investors benefit from strategically-focused return streams, including the Direxion MSCI USA ESG – Leaders vs. Laggards ETF (Ticker: ESNG), the Direxion Flight to Safety Strategy ETF (Ticker: FLYT), and the Direxion S&P 500 High Minus Low Quality ETF (Ticker: QMJ).
ESNG aims to offer more pronounced exposure to environmental, social & corporate governance leaders, while simultaneously having a short position in those that significantly lag behind, as defined by MSCI’s market-leading ESG metrics. The ETF tracks an index that measures both the ESG rating, as well as the rating trend, of companies relative to their sector peers. Utilizing a 150/50 structure, the index methodology creates an extended exposure (equal to 150% of net assets at rebalance) to the 100 highest scoring ESG companies, while having a short position (50% of assets) to the 100 lowest scoring companies, in the MSCI USA universe, with a net long exposure of 100% (that is, no net leverage). It is the first ESG ETF of its kind offering such an exposure.
FLYT combines long-term U.S. Treasurys, utility stocks, and physical gold into a single portfolio. FLYT is designed to deliver a source of returns uncorrelated to the equity markets, with the ability to provide meaningful appreciation and yield potential over the long term. This allows investors to not only mitigate potential market risk but participate in a low cost way that many liquid alternative strategies have struggled to deliver. The fund seeks to reduce portfolio risk by being a highly responsive investment in the event of market volatility and equity declines.
QMJ utilizes a simple, capital-efficient 150/50 structure to seek to deliver increased exposure to the quality factor. The index and fund will target 150% exposure to the stocks with the highest-scoring measures of quality (including return on equity, financial leverage ratio, and accruals ratio) while maintaining a negative 50% exposure to low quality stocks as defined by S&P from the universe of 500 stocks. It is also the first smart beta ETF of its kind to offer such an exposure to the quality factor, which continues to gain investor attention relative to more well-known factors, such as value or low volatility.
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