The Renaissance Of The Moonshot Era

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Investing in Potentially World-Altering Innovation

The start of the current decade introduced to the world an array of challenges wholly unique to contemporary history. The COVID-19 pandemic revealed the threat that disease still poses to humanity, massive state-sponsored cyberattacks exposed the vulnerabilities of public and private institutions and economic strife deepened the divide between the haves and have-nots.

But the recent past has also opened the door for potentially world-altering advances. Electric and zero-emission vehicles are increasingly taking over the road from gas-powered cars, advances in gene editing technologies are paving the way for better therapeutic treatments for often debilitating diseases and the continued growth in computing power and sophistication is allowing for untold advancements in how society leverages technology for a variety of purposes.

For its part, the investment world is seemingly on-board with this ethos, as evidenced by the Direxion Moonshot Innovators ETF MOON, a fund pegged to the S&P Kensho Moonshots Index whose components include 50 of the most innovative companies pursuing solutions to the unprecedented circumstances of the contemporary world. Since its inception in November 2020, the ETF has gained roughly 80% as the market maintains its bullish stance toward new and potentially revolutionary companies.

Core Technology

As you might expect, the fund’s distribution is heavily weighted toward the tech sector. However, the diversity of industries and firms represented within the segment comports with how wide-reaching software and hardware are in the daily operations of contemporary society.

Among the tech firms in which the fund is currently allocated are those with products that are fundamental components leading the way in technological innovation. Included in the fund are semiconductor manufacturers like Ambarella Inc. AMBA and Silicon Labs SLAB, which develop processors tailored to work with high-intensity applications such as computer vision recognition, IoT cloud networking and digital automation.

In addition to these components, the fund is peppered with new and innovative software firms. Many of the fund’s largest software holdings are in firms such as Tenable Holdings TENB and NetScout Systems, Inc. NTCT, which specialize in the increasingly essential cybersecurity field. This heavy allocation toward cybersecurity follows the massive SolarWinds hack that infiltrated several U.S. federal agencies, which thrust the entire cybersecurity industry into the spotlight and drew massive interest from the investment world.

Healthcare and Biotech

The healthcare and biotech industries are undergoing similar paradigm shifts in patient care and pharmaceutical science, driven in part by advances in gene- and immuno-therapy technology that has fostered a class of highly targeted pharmaceutical therapies able to address disease on a genetic level.

MOON incorporates some of the leading gene- and immuno-therapy biotechs within its structure, such as Homology Medicines Inc FIXX, which specializes in gene-editing platforms and technology, as well as Fate Therapeutics Inc. FATE, which is studying cancer treatment immunology.

In addition to the pharmaceutical side, the fund also carries several med-tech and imaging names like Accelerate Diagnostics, Inc. AXDX and other firms developing technology and software that aids medical professionals in delivering improved patient care and outcomes.

Industrials and Transportation

One final major market sector that MOON offers exposure to is the manufacturing and industrial sector. Industrials, perhaps more than even the core technology segment, are seeing some massive wholesale disruption, from supply chain management to aerospace and defense to core manufacturing.

However, one of the most heavily represented segments of the fund is in transportation, specifically electric, hydrogen fuel cell, and autonomous vehicles. The ETF includes major leaders in their respective specializations, including Workhorse Group Inc. WKHS, FuelCell Energy FCEL, Plug Power Inc. PLUG and Veoneer Inc. VNE.

Given the massive changes already taking place on street level, like the meteoric rise of electric vehicles and the sunsetting of fossil fuel cars, the priority MOON gives to next-generation transportation is understandable. Green transportation is just the first in a potentially long line of revolutionary changes the world is likely to see in the coming years. 

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MOON (As of 12/31/2020) Top Ten Holdings %

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Shares of the Direxion Shares are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.

Direxion Shares ETF Risks – Investing involves risk including possible loss of principal. There is no guarantee the investment strategy will be successful. The value of stocks of information technology companies and companies that rely heavily on innovation and technology are particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation and competition, both domestically and internationally, including competition from competitors with lower production costs. Innovative technology companies may struggle to capitalize on new technology or may face competition and obsolescence. Additional risks of the Fund include, but are not limited to, Index Correlation/Tracking Risk, Index Strategy Risk, Market Disruption Risk, and risks associated with the market capitalizations of the securities in which the Fund may invest. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.
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The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.