Direxion, a leader in alternative investment solutions, has announced changes to the principal investment strategy of Direxion S&P 1500 RC Volatility Response Shares (NYSEARCA:VSPR), Direxion S&P 500 RC Volatility Response Shares (NYSEARCA:VSPY) and Direxion S&P Latin America 40 RC Volatility Response Shares (NYSEARCA:VLAT), which will be effective on or aboutJune 14, 2012.
Each Fund tracks a rules-based S&P Risk Control Index, which in turn assigns a target volatility level for the corresponding S&P cap-weighted index. The Risk Control indexes are designed to respond to the volatility levels of the underlying indexes by adjusting the exposure levels to equities (stock component) and U.S. Treasury Bills (cash component) at various volatility levels. As volatility increases, exposure to the stock component will decrease and exposure to the cash component will increase. As volatility decreases, exposure to the stock component will increase and exposure to the cash component will decrease. Effective on or about June 14th the percentage exposure to the stock component is expected to range between 10% and 100%, and will be limited not to exceed 100%. Exposure to the Cash Component is expected to range between 0% and 90%.
“These Funds can be valuable tools that equity investors can use to help mitigate risk more effectively,” said Ed Egilinsky, Managing Director and Head of Alternative Investments at Direxion. “Since periods of lower volatility have historically tended to offer growth opportunities, while periods of higher volatility usually indicate an increase in overall market risk, tracking volatility as a gauge for exposure to equities is an intelligent way for investors to protect their assets.”
The Funds operate according to a rules-based investment approach in which equity exposure is determined by volatility. Their strategy dictates that equity exposure should be reduced during periods of high overall market volatility. On average, the Funds utilize a one-month window of historic exponential volatility to determine equity allocation. The Funds are built to accommodate fast and frequent adjustments, and their corresponding indices are monitored daily and automatically rebalanced every month, if not more often.
For more information about Direxion, please contact James Doyle at 973-850-7308 or [email protected].
Direxion Funds and Direxion Shares, managed by Rafferty Asset Management, LLC, offer leveraged index funds, ETFs and alternative-class fund products for investment advisors and sophisticated investors who seek to effectively manage risk and return in both bull and bear markets. Founded in 1997, the company has approximately $7.8 billion in assets under management as of 12/31/11. The company’s business model is built on continuous product innovation, exceptional customer service and a commitment to building strategic relationships with distribution partners. For more information, please visit www.direxionfunds.com or www.direxionshares.com.
An investor should consider the investment objectives, risks, charges, and expenses of Direxion Shares carefully before investing. The prospectus and summary prospectus contain this and other information about Direxion Shares. Click here to obtain a prospectus and summary prospectus or visit our website at www.direxionshares.com. The prospectus and summary prospectus should be read carefully before investing.
An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified which means it invests a high percentage of its assets in a limited number of securities. The Fund may at times use derivatives such as futures contracts, forward contracts, options and swaps which could subject them to market risks that may cause price fluctuation over time. Increased portfolio turnover may result in higher transaction costs and capital gains. For other risks including counterparty risk, tracking error risk and specific risks of exchanged traded funds, please read the prospectus.
The S&P 1500® Index is a composite index of the S&P 500® Index, S&P 400® Index and S&P 600® Index, which are composed of stocks representing the large capitalization, mid capitalization and small capitalization segments of the U.S. equity market, respectively. The S&P 500® Index measures the large capitalization segment of the domestic equity market, composed of stocks of the 500 domestic companies with the largest capitalization. The S&P Latin America 40 Index is an index of 40 stocks drawn from four major Latin American markets: Brazil, Chile, Mexico and Peru. The constituents are leading, large, liquid, blue chip companies from the Latin American markets, capturing 70% of the total market capitalization of each of their respective Latin American markets. One cannot invest directly in an index.
Distributor: Foreside Fund Services, LLC