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3 Unique ETF Strategies To Consider Right Now

February 12, 2020 10:21 am
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3 Unique ETF Strategies To Consider Right Now

Plain vanilla, cap-weighted exchange-traded funds dominate the industry landscape, but there are plenty of potent offerings to consider with different and downright unique methodologies.

Direxion, often known for its extensive lineup of leveraged ETFs, offers some funds that go beyond the boring old cap-weighted strategy. More importantly, some of these products are relevant and useful in today's market environment.

Here are a few to consider

Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE)

The Direxion NASDAQ-100 Equal Weighted Index Shares (NYSE:QQQE) is an ideal fund for investors to consider today because, as has been noted, an outsized portion of the S&P 500's year-to-date gains are confined to Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG).

That quartet combines for an even larger part of the Nasdaq-100 Index, meaning weakness in one or more of those stocks could punish the cap-weighted version of that benchmark.

Concentration risk isn't a concern with QQQE, but that doesn't mean investors miss out on upside as Apple and friends. QQQE resides near all-time highs and is up 6% to start 2020.

Direxion Russell 1000 Growth Over Value ETF (RWGV)

Value stocks continue lagging their growth rivals and investors can really exploit that scenario with the Direxion Russell 1000 Growth Over Value ETF (NYSE:RWGV), which is long growth and short value names.

RWGV tracks the Russell 1000 Growth/Value 150/50 Net Spread Index, arriving at 100% long exposure via a 150% long in the Russell 1000 Growth Index and a 50% short allocation to the value counterpart. Due to the constitution of the growth benchmark, RWGV can be paired with the aforementioned QQQE because the relative weight fund features significant exposure to Apple, Microsoft, etc.

The strategy works as highlighted by its 12-month gain of 39.50%.

Direxion MSCI Cyclicals Over Defensives ETF (RWCD)

It's not that defensive stocks have been bad, but rather cyclicals have been better. Investors can capitalize on that theme with the Direxion MSCI Cyclicals Over Defensives ETF (NYSE:RWCD).

RWCD follows the MSCI USA Cyclical Sectors – USA Defensive Sectors 150/50 Return Spread Index and gets a big help from Apple, Microsoft and Amazon, which combine for about 24% of the benchmark's weight.

In other words, RWCD's 49% tech weight is helping the fund and is one of the reason's it's 8% to start 2020.

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