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Russell indices underpin new ETFs based on sectors and commodities

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While Direxion Funds’ launch of eight exchange-traded funds based on Russell indices last week was a premiere for funds specifically tracking the firm’s sector methodology, funds launched

While Direxion Funds’ launch of eight exchange-traded funds based on Russell indices last week was a premiere for funds specifically tracking the firm’s sector methodology, funds launched on the London Stock Exchange and Irish Stock Exchange by ETF Securities employ for the first time Russell’s commodity industry indices for long exposure to world markets.

‘Both launches showcase the growing demand for a widening array of products based on our benchmarks,’ says Ron Bundy, a managing director at Russell Indexes. ‘For similar reasons, these new ETF products rely on the same objective index methodology used for more than USD4trn in benchmarked funds.’

The new Direxion Shares Bull and Bear leveraged index funds seek 300 per cent of the daily performance before fees and expenses, or 300 per cent of the inverse of the daily performance, of four Russell indices, including the large-cap Russell 1000 Energy Index as the benchmark for the Direxion Energy Bull 3x Shares fund and the Direxion Energy Bear 3x Shares fund. Similar funds are based on the Russell 1000, Russell 2000 and Russell 1000 Financial Services indices.

ETF Securities’ first platform of ETFs tracking equity indexes, including the Russell 1000 and Russell 2000 as well as the newly-unveiled Russell Global Coal, Russell Global Gold, Russell Global Steel Large Cap and Russell Global Shipping Large Cap indices, were listed this week in London, following their launch on the Irish Stock Exchange.

‘These innovative investment strategies clearly demonstrate Russell’s ability to segment our comprehensive index design to great depth and with consistent precision,’ Bundy says.

He argues that the new ETFs demonstrate the industry’s growing acceptance of Russell’s index methodology. The global indices launched last year have attracted nearly 200 subscribing clients, including more than 100 investment managers. The new funds are based on the sectors and industry groupings available with Russell Global Sectors, which features nine sectors and spans more than 10,000 stocks, 163 industries and 70 countries.

Russell managed some USD180bn in assets at the end of September for individual, institutional and advisor clients in more than 40 countries and provides investment solutions including mutual funds, retirement investments, institutional asset management, implementation services and global stock market indices.

Founded in 1936, Russell is a subsidiary of Northwestern Mutual Life Insurance and employs around 2,200 people at its headquarters in Tacoma, Washington, and offices in financial centres including Amsterdam, Auckland, Johannesburg, London, Melbourne, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and Toronto.

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