Direxion Unveils Broad Suite Of Relative Weight ETFs

Direxion, one of the largest issuers of inverse and leveraged exchange traded funds, is expanding its ETF footprint with the launch of a broad suite of relative weight funds.

The firm's relative weight suite, comprised of 10 ETFs, allows investors to express views such as value stocks over growth fare, emerging markets over developed economies, small caps over large stocks and more.

What Happened

The new ETFs from Direxion are long/short funds with the underlying indexes for each fund being built with a 150 percent long component and 50 percent short component.

“The ETFs provide relative outperformance if the long component outperforms the short component,” said Direxion in a statement. “The strategy implements the long side of the trade, and then also rewards an investor when a macro view is correct.”

Why It's Important

Direxion's newest ETFs are as follows:

• The Direxion Russell 1000 Value Over Growth ETF (RWVG)
• Direxion Russell 1000 Growth Over Value ETF (RWGV)
• Direxion Russell Large Over Small Cap ETF (RWLS)
• Direxion Russell Small Over Large Cap ETF (RWSL)
• Direxion MSCI Cyclicals Over Defensives ETF (RWCD)
• Direxion MSCI Defensives Over Cyclicals ETF (RWDC)
• Direxion MSCI Emerging Over Developed Markets ETF (RWED)
• Direxion MSCI Developed Over Emerging Markets ETF (RWDE)
• Direxion FTSE Russell US Over International ETF (RWUI)
• Direxion FTSE Russell International Over US ETF (RWIU)

The new funds help investors not only participate in upside offered by a particular cycle or theme, but potentially boost returns by participating in some of the potential downside in factors, geographic exposures and sectors that could be adversely affected by those themes.

“One of the best ways to take advantage of cyclicality is not only to invest in stocks on the upside, but the ability to access returns from shorting stocks on the downside in order to seek to maximize returns by benefitting from the spread, that is the difference in returns,” said Direxion.

What's Next

Each of Direxion's new relative weight ETFs track indexes from FTSE Russell or MSCI Inc.

“On a monthly basis, each index will rebalance such that the weight for the long component will be 150% and the short component will be 50%,” according to the issuer.

Derivatives, such as futures and swaps, are used to bring the long exposure of the funds to 150 percent and to establish the funds' short exposure.

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