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Direxion launches relative weight ETFs

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Direxion has launched the first 10 ETFs of its new Relative Weight suite, part of a firm evolution offering new products to help a wider swath of investors more precisely express market views.

With the launch, Direxion offers the first relative value strategy in an index-based fund, allowing investors to capture both sides of an expressed view – whether they believe, for example, value will outperform growth, emerging will outperform developed markets, or vice versa.
 
The ETFs seek to track indexes from FTSE Russell and MSCI that capture common macro thematic views, without the typical constraints encountered with other funds. Investors who deploy some level of thematic views in their investment process can now use shorting to enhance their long exposure.
 
“You can overweight growth if you believe it’s going to outperform the market. But, for some investors, that only captures half of their view. If growth beats the market, then it obviously beats value by even more,” says Dave Mazza, Managing Director and Head of Product of Direxion. “The beauty of these funds is they allow you to extend your viewpoint to the short side to seek additional returns. Your view is no longer mismatched with the fund—the fund is now designed to match your view.”
 
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.
 
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)
 
The index for each Relative Weight ETF is built with a 150 per cent long component and 50 per cent short component, resulting in a net exposure of 100 per cent 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,” says 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.”

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