'Moonshot' ETF Enters Disruptive Space

November 13, 2020

Yesterday, Direxion launched an ETF based on the idea of the “moonshot” and the importance of innovation. The Direxion Moonshot Innovators ETF (MOON) tracks an index of 50 companies that have the potential to disrupt the technologies and industries they operate in.

MOON comes with an expense ratio of 0.65% and lists on the NYSE.

The S&P Kensho Moonshots Index underlies the fund and relies on an early stage composite innovation score that incorporates a company’s innovation sentiment and allocation to innovation scores. The methodology uses natural language processing to determine the former and the latter is determined by the ratio of research and development expenses to revenues. The index selects the highest scoring 50 companies from its selection universe for inclusion, according to MOON’s prospectus.

The index uses a modified equal weighting approach, with annual reconstitutions and semi-annual rebalances, the document says.

There have been a lot of disruptive innovation ETFs launched in the past few years. Most recently, Goldman Sachs recently merged five ETFs that originally tracked indexes from the now-defunct Motif into one ETF focused on five areas of disruptive innovation: data, finance, human evolution, manufacturing and shifts with consumers. The Goldman Sachs Innovate Equity ETF (GINN) has more than $300 million in assets under management.

There’s also the $10 billion ARK Innovation ETF (ARKK), the original disruptive innovation ETF, which launched in 2014, and the nearly $3 billion iShares Exponential Technologies ETF (XT), which launched in 2015 and was the brainchild of advisor Ric Edelman. MOON is entering a fairly crowded space, but one where there is a lot of room for alternative interpretations.

Contact Heather Bell at [email protected]

 

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