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Direxion accelerates expansion of ETF strategies for long-term investors


Direxion has launched the first three of several planned ETF launches for 2020. The new ETFs are part of an acceleration of fund offerings to help long-term buy-and-hold investors benefit from strategically-focused return streams.The three new funds include the Direxion MSCI USA ESG – Leaders vs Laggards ETF (ESNG), the Direxion Flight to Safety Strategy ETF (FLYT), and the Direxion S&P 500® High Minus Low Quality ETF (QMJ).

ESNG aims to offer more pronounced exposure to environmental, social & corporate governance leaders, while simultaneously having a short position in those that significantly lag behind, as defined by MSCI’s market leading ESG metrics. The ETF tracks an index which measures both the ESG rating, as well as the rating trend, of companies relative to their sector peers. Utilising a 150/50 structure, the index methodology creates an extended exposure (equal to 150 per cent of net assets at rebalance) to the 100 highest scoring ESG companies, while having a short position (50 per cent of assets) to the 100 lowest scoring companies, in the MSCI USA universe, with a net long exposure of 100 per cent (that is, no net leverage). It is the first ESG ETF of its kind offering such an exposure. 

Similarly, QMJ utilises a simple, capital-efficient 150/50 structure to seek to deliver increased exposure to the quality factor. The index and fund will target 150 per cent exposure to the stocks with the highest scoring measures of quality (including return on equity, financial leverage ratio, and accruals ratio), while maintaining a negative 50 per cent exposure to low quality stocks as defined by S&P from the universe of 500® stocks. It is also the first smart beta ETF of its kind to offer such an exposure to the quality factor*, which continues to gain investor attention relative to more well-known factors, such as value or low volatility.

FLYT combines long-term US Treasurys, utility stocks, and physical gold into a single portfolio. FLYT is designed to deliver a source of returns uncorrelated to the equity markets, with the ability to provide meaningful appreciation and yield potential over the long term. This allows investors to not only mitigate potential market risk, but participate in a low cost way that many liquid alternative strategies have struggled to deliver. The Fund seeks to reduce portfolio risk by being a highly responsive investment in the event of market volatility and equity declines.

“We’re on a mission to accelerate the number and variety of strategies we offer that can benefit  long-term investors,” says Dave Mazza, Managing Director at Direxion. “These strategies allow a broader audience to benefit from our expertise in delivering smart, precise exposure to distinct and strategically focused investment opportunities.”

Although Direxion continues as the leader in 3X Leveraged ETFs for traders, the ETFs planned for rollout in subsequent 2020 quarters will focus on Direxion’s commitment to extending the firm’s expertise in allowing more surgical exposure to longer-term investment themes.

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