“The concept here is we’re looking to take a strategy that institutions have been able to take advantage of for many years–relative value investing–but do so on a scale for all investors in a very efficient way via the ETF wrapper,” Mazza added.
10 ETFs Based on Familiar Building Blocks
Direxion’s 10 ETFs cover five well-known investment pairs, and are built using familiar passive building blocks:
|Direxion Russell 1000® Value Over Growth ETF||Russell 1000® Value/Growth 150/50 Net Spread Index||RWVG|
|Direxion Russell 1000® Growth Over Value ETF||Russell 1000® Growth/Value 150/50 Net Spread Index||RWGV|
|Direxion Russell Large Over Small Cap ETF||Russell 1000®/Russell 2000® 150/50 Net Spread Index||RWLS|
|Direxion Russell Small Over Large Cap ETF||Russell 2000®/Russell 1000® 150/50 Net Spread Index||RWSL|
|Direxion MSCI Cyclicals Over Defensives ETF||MSCI USA Cyclical Sectors – USA Defensive Sectors 150/50 Return Spread Index||RWCD|
|Direxion MSCI Defensives Over Cyclicals ETF||MSCI USA Defensive Sectors – USA Cyclical Sectors 150/50 Return Spread Index||RWDC|
|Direxion MSCI Emerging Over Developed Markets ETF||MSCI Emerging Markets IMI – EAFE IMI 150/50 Return Spread Index||RWED|
|Direxion MSCI Developed Over Emerging Markets ETF||MSCI EAFE IMI – Emerging Markets IMI 150/50 Return Spread Index||RWDE|
|Direxion FTSE Russell US Over International ETF||Russell 1000®/FTSE All-World ex US 150/50 Net Spread Index||RWUI|
|Direxion FTSE Russell International Over US ETF||FTSE All-World ex US/Russell 1000® 150/50 Net Spread Index||RWIU|
“We think broadly from an asset allocation point of view that these are the building blocks used to construct portfolios,” said Mazza.
The index for each Relative Weight ETF is built with a 150% long component and 50% short component, resulting in a net exposure of 100% of assets. Each ETF and its benchmark index has an oppositely-weighted counterpart. The ETFs provide relative outperformance if the long component outperforms the short component. The strategy implements the long side of the trade, and then also rewards an investor when a macro view is correct.
While most known for tactical trading funds, Direxion has in recent years deliberately expanded offerings to more thematic investors and strategic allocators—notably with its PortfolioPlus Suite launch 11 months ago.
“Today’s launch marks a clear inflection point for the firm,” said Rob Nestor, President and Head of Direxion. “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.”
“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. It is our way of building on our DNA,” Nestor added.
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