A sound investment process and strong management team underpin Direxion Work From Home ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in momentum exposure and quality exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The team managing the passive product drives the strategy's Above Average People Pillar rating. The strategy is part of a first-rate parent that has overall reasonable fees and minimal portfolio manager turnover. These attributes support its Above Average Parent Pillar rating.

Analyst Rating

Alphabet

SYNNEX

DocuSign

HubSpot

Amazon

Oracle

Palo Alto Networks

Microsoft

Xerox

Atlassian

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Direxion Work From Home ETF earns an Above Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 100% also buttresses the rating. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 50%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results, before fees and expenses, that track the Solactive Remote Work Index (the “index”).  The fund, under normal circumstances, invests at least 80% of its assets in the securities that comprise the index or investments with economic characteristics similar to the securities included in the index. The index is comprised of 40 companies that provide products and services in one of the following industries that facilitate the ability of people to work from home: remote communications, cyber security, online project and document management, and and cloud computing technologies (“WFH Industries”). The fund is non-diversified. 

 The portfolio is overweight in technology and communication services relative to the category average by 5.2 and 3.6 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and financial services, with industrials underweighting the average portfolio by 2.9 percentage points of assets and financial services similar to the average. The portfolio is composed of 40 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 34.0% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 52.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 37% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Direxion’s team earns an Above Average People Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 100%. The stability of the management team also supports the rating. Specifically, the fund has not seen a manager change in the last four years. Lastly, the rating is limited by the parent firm's five-year success ratio of 25%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

People

Direxion remains well-positioned in an increasingly competitive industry, earning it an Above Average Parent Pillar rating. Direxion stands out from a cost perspective for open-end and exchange-traded funds, demonstrating a firm-wide commitment to minimizing costs and maximizing investors' returns. On average, fees for the firm's funds are in the second-lowest quintile of category peers. Direxion has brought continuity to its product shelf, with low portfolio management turnover compared with peer firms over the past five years.

Parent

Direxion Work From Home ETF

WFH tracks an equally-weighted index of global firms that provide technology that supports a more flexible work environment. Stocks are selected using a proprietary natural language processing algorithm.

Alarm.com

Lockheed Martin

MetLife

PayPal

Redfin

Robert Half Int.

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News for Direxion Work From Home ETF ETF (WFH)