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Strategic Weight ETFs

ESNG

The Direxion MSCI USA ESG – Leaders vs. Laggards ETF seeks investment results, before fees and expenses, that track the MSCI USA ESG Universal Top-Bottom 150/50 Return Spread Index. There is no guarantee that the fund will achieve its stated investment objective.

Overview

The Direxion MSCI USA ESG – Leaders vs. Laggards ETF aims to deliver a unique approach to ESG investing that is long and overweight companies with high ESG ratings and is short those with low ESG ratings. This approach allows investors to express a more complete view on both the leaders and laggards in ESG issues within the MSCI USA universe.

  • Capital-efficient 150/50 structure that extends the ESG universe to capture both leading and lagging companies
  • The strategy captures both the aggregate MSCI ESG score as well as the ESG rating trend, and does this at the sector level to identify companies doing well (or poorly) relative to their peers
  • Aims to offer a similar beta to the U.S. equity market while incorporating a robust approach to ESG investing, making it a potential option as a core holding for investors

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Target Index

MSCI USA ESG Universal Top – Bottom 150/50 Return Spread Index (the “Index”) seeks to provide long exposure to companies with high environmental, social, and governance (“ESG”) ratings and trend relative to their sector peers and short exposure to companies with low ESG performance relative to their sector peers as determined by MSCI, the “Index Provider”. To this end, the Index consists of a portfolio that has 150% long exposure to the MSCI USA ESG Universal Top 100 5% Issuer Capped Index (the “Long Component”) and 50% short (or inverse) exposure to the MSCI USA ESG Universal Bottom 100 5% Issuer Capped Index (the “Short Component”). The Index, and both the Long and Short Components are reviewed, reconstituted, and rebalanced on a quarterly basis. One cannot directly invest in an index.

Index Holdings & Sector Weightings

Top 5 Long Holdings %

Amazon.com 7.94
Microsoft 7.81
Home Depot 5.20
AMGEN 4.52
Blackrock 4.34

Top 5 Short Holdings %

Wells Fargo -2.55
NETFLIX -2.41
Intel -2.37
PFIZER -2.07
Broadcom Limited -1.89

Index Sector Weightings %

Information Technology 23.28
Health Care 19.56
Financials 12.66
Industrials 10.06
Consumer Staples 8.26
Consumer Discretionary 8.10
Communication Services 4.64
Utilities 3.87
Real Estate 3.74
Energy 3.10
Materials 2.73

Source: Bloomberg. Index and Sector weightings are net and as of 6/30/2020 and subject to change.

 

Index Construction

The MSCI USA ESG Universal Top-Bottom 150/50 Return Spread Index combines long positions (150%) of 100 securities with the highest combined ESG scores with short positions (-50%) of the 100 securities with the lowest combined ESG scores.

  • Securities are selected from the MSCI USA Index
  • Both rating and trend result in a Combined ESG score
  • Security weights are based on Market Cap weighted ESG scores

ESG Ratings

A Robust Scoring Methodology captures both ESG Leaders and ESG Laggards

The benchmark index for ESNG employs a proprietary, rules-based methodology to identify industry leaders and laggards. Companies are rated on an ‘AAA to CCC’ scale according to their exposure to ESG risks and how well they manage those risks relative to peers.

ESNG will overweight the leaders at the top of the ratings and short the laggards at the bottom.

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Pricing & Performance

NAV and Market Price information as of Invalid date. Line chart shows pricing trend over the last 30 days. The Primary Listing Exchange is the NYSE Arca, Inc.




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