Rockville, Maryland-based Rydex Investments, which manages some USD16bn in assets via nearly 100 mutual funds and exchange-traded products, has launched eight new leveraged and inverse exc
Rockville, Maryland-based Rydex Investments, which manages some USD16bn in assets via nearly 100 mutual funds and exchange-traded products, has launched eight new leveraged and inverse exchange-traded funds on the American Stock Exchange.
RydexShares leveraged and inverse Select Sector ETFs aim to offer investors magnified and inverse exposure to Select Sector indices covering energy, financial, technology and health care. With more than USD25bn in benchmarked assets, Rydex says, Select Sectors are the largest and most liquid US indices for sector investing.
The new products are the Energy Select Sector Rydex 2x S&P Select Sector Energy ETF, Rydex Inverse 2x S&P Select Sector Energy ETF, Financial Select Sector Rydex 2x S&P Select Sector Financial ETF, Rydex Inverse 2x S&P Select Sector Financial ETF, Health Care Select Sector Rydex 2x S&P Select Sector Health Care ETF, Rydex Inverse 2x S&P Select Sector Health Care ETF, Technology Select Sector Rydex 2x S&P Select Sector Technology ETF, and Rydex Inverse 2x S&P Select Sector Technology ETF.
‘Financial professionals have shown significant interest in leveraged and inverse strategies for their potential to help capitalise on directional market moves or hedge an investment portfolio,’ says Carl Verboncoeur, chief executive of Rydex Investments.
‘As the pioneer of leveraged and inverse mutual funds, we’re excited to bring new ETFs to the marketplace that offer unique leveraged and inverse exposure to the most widely-traded sector indices.’
Rydex’s leveraged Select Sector ETFs aim to magnify their benchmark exposures by 200 per cent, offering investors greater exposure to an index with less capital. The inverse Select Sector ETFs to move in the opposite direction of their benchmarks, giving investors the ability to profit during sector downturns.
‘The Select Sector indices represent various sector components within the S&P 500,’ says Edward Lopez, director of ETF strategies at Rydex. ‘For those financial professionals who have built portfolio models around the S&P 500, as well as the Select Sector indices themselves, the new leveraged and inverse ETFs may provide a useful and convenient way to achieve directional exposure.’
RydexShares leveraged and inverse Select Sector ETFs, which have an expense ration of 70 basis points, complement the firm’s existing line-up of leveraged and inverse ETFs, which provide broad market exposure to small-, large- and mid-cap indices.
According to Lopez, recent market volatility has prompted increased demand for ETFs that enable advisors to short specific segments of the market or take advantage of sector opportunities by using leveraged strategies
‘The availability of new products combined with increased interest in leveraged and inverse ETFs calls for education about how these sophisticated products work, including their potential benefits and risks,’ he says.