Direxion's Relative ETFs Give Cues Of 5 Hot Investing Trends

The widely popular ETF world is now seeing a wide range of innovative and fresh-themed products that suit changing macroeconomic dynamics. In keeping with that, Direxion launched the first 10 ETFs of its new Relative Weight suite a month back.

The concept is quite new as investors get to have a comparison-oriented view with these products like value will outperform growth, emerging will outperform developed markets, or vice versa. As a result, these products give you a clear idea of investors’ current preference or the trending market mood or the hot investing trends.

Below we highlight hot ETF trends suggested by Direxion’s patterns.

Developed Ruling — Direxion Developed Over Emerging Markets ETF (RWDE)

The underlying MSCI EAFE IMI (LON:IMI) Emerging Markets IMI 150/50 Return Spread Index measures the performance of a portfolio that has 150% long exposure to the MSCI EAFE IMI Index and 50% short exposure to the MSCI Emerging Markets IMI Index.

Renewed global growth worries, especially in Europe and Japan, have raised chances that central banks will remain dovish in the developed economies in the near term. This has ensured few more days of cheap money inflow and a steady stock market. The fund gained 2.2% on Feb 15.

Small-Caps Wining — Direxion Russell Small Over Large Cap ETF (RWSL)

The underlying Russell 2000/Russell 1000 150/50 Net Spread Index measures the performance of a portfolio that has 150% long exposure to the Russell 2000 Index and 50% short exposure to the Russell 1000 Index.

Since U.S. small-cap stocks are more domestically-focused and the U.S. economy is better-positioned than the major international ones, there is every reason for small-caps to have an upper hand. The fund added 1.7% on Feb 15.

Value Override Growth Direxion Russell 1000 Value Over Growth ETF (RWVG)

The underlying Russell 1000 Value/Growth 150/50 Net Spread Index measures the performance of a portfolio that has 150% long exposure to the Russell 1000 Value Index and 50% short exposure to the Russell 1000 Growth Index.

Global growth worries are rife. A solution to the ongoing U.S.-China trade crisis is not in sight right now, but efforts of a truce are on. Brexit issues are the biggest overhangs for the stock market. U.S. economy’s first-quarter growth is likely to backtrack due to a government shutdown. The fund was up 1.7% on Feb 15 (read: 3 Overlooked Value ETFs & Stocks to Grab Now).

Defensives Are Dearer — Direxion Defensives Over Cyclicals ETF (RWDC)

The underlying MSCI USA Defensive Sectors USA Cyclical Sectors 150/50 Return Spread Index measures the performance of a portfolio that has 150% long exposure to the MSCI USA Defensive Sectors Index and 50% short exposure to the MSCI USA Cyclical Sectors Index.

A dovish Fed, which kept the U.S. treasury yields at subdued levels, and ongoing worries related to global growth increased the appeal of defensive sectors and ETFs like RWDC.Health Care (73.68%) and Consumer Staples (34.94%) have got a considerable long position in the fund. The fund added 1.3% on Feb 15.

U.S. Steadier — Direxion Russell US Over International ETF (RWUI)

GDP growth and inflation data have been much steadier in the United States than several international economies. The European Commission now expects Euro zone growth to slow to 1.3% this year from 1.9% in 2018. The new estimate marks a sharp decline from the Commission’s previous Euro zone growth forecast for 2019 of 1.9%. The Bank of England lowered its growth forecast for 2019 from 1.7% to 1.2% (read: Worried About European Growth? Play These 5 ETFs).

Underlying Russell 1000/FTSE All-World ex US 150/50 Net Spread Index measures the performance of a portfolio that has 150% long exposure to the Russell 1000 Index and 50% short exposure to the FTSE All-World ex US Index. The fund gained 1% on Feb 15.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>