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As more investors look for more out of an investment portfolio, many are diving deeper into ETFs for alternative strategies to help enhance returns.
“Advisors are looking beyond the core,” Rob Nestor, President of Direxion, said at Inside ETFs. “If you think about it, most investors have some macro view of the world – I believe value is going to outperform growth or I believe U.S. is going to beat international. With our launch of the relative weight portfolio, it really was the intersection of our core competency, providing precise directed exposure with the interface of the investors increasingly moving to top-down macro thematic views to accent or be part of a new core.”
To help investors better access the markets, Direxion has come out with 10 ETFs to cover five well-known investment pairs, and they are built using familiar passive building blocks, including:
| Fund Name | Index | Ticker |
|---|---|---|
| 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) |
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.
Each fund allows investors to capture both sides of their expressed view, with a risk profile similar to the broad underlying asset class. The products are built on Direxion’s core expertise of delivering sophisticated and precise exposure, whether views are short, intermediate or long term.
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With these new ETFs, Direxion is the first to offer this long-short relative value strategy in an index-based fund. Whether they believe, for example, value will outperform growth, emerging will outperform developed markets, or vice versa–all is captured within the convenience of one ETF as opposed to holding two separate positions.
For more ETF-related commentary from Tom Lydon and other industry experts, visit the video category on ETF Trends.
Related: ETF Trends Relative Value Channel
