A recent filing from Direxion outlines its plans to launch a fund that will take long and short positions in the U.S. market based on what stage the global economy is in. The Direxion Credit Suisse U.S. Hedged Equity Index ETF will focus on the 1,500 largest U.S. companies, and it will hedge that investment with a short position in the S&P 500 Index that can range from nothing to an amount equal to the long portion of the portfolio.
The long portfolio will determine whether the global economy is overheating, slowing down, contracting or recovering by looking at global production and capacity levels. It will then take long positions in companies that exhibit traits that have been found to do well in whichever stage the market has been determined to be in. Of the companies that exhibit the desired characteristics, the index selects the largest 100 in terms of market capitalization and equal-weights them.
The fund’s prospectus notes that the short position can be rebalanced as often as daily, while the long positions are rebalanced on a quarterly basis.
Although there are a number of long/short exchange-traded products on the market right now, including offerings from ProShares, First Trust and Credit Suisse, few of them have gathered very much in assets. The largest appears to be the ProShares RAFI Long/Short ETF (RALS | D-51), which has $43 million in assets under management after launching in late 2010. And the AdvisorShares Accuvest Global Long Short ETF (AGLS | 38) is set to close down in September.
The filing did not include an expense ratio or ticker.