The Market Vectors Russia ETF (NYSEArca:RSX), as well as a
bull-and-bear pair of triple-exposure Russia funds from Direxion,
are now tied to a Market Vectors index, in what appears to be the
first time an ETF outside of Van Eck's Market Vectors family of
funds is tied to one of its proprietary benchmarks.
The Market Vectors Russia Index has replaced the DAXGlobal
Russia+ Index, which until earlier this month was benchmarking not
only RSX, but the Direxion Daily Russia Bull 3x ETF (NYSEArca:RUSL)
and its inverse counterpart, the Direxion Daily Russia Bear 3x ETF
Many Market Vector ETFs are tied to an in-house index, and RSX
now fits that bill. Of the company's 15 international equities
ETFs, 12 are based on proprietary indexes. That ratio is smaller
when domestic and hard assets equities ETFs are included, coming to
roughly six out of 10, and that's primarily because about
two-thirds of Market Vectors' hard assets funds are tied to outside
New York-based Van Eck, which has been long known as a fund
manager, has also been slowly expanding its Market Vectors index
provider unit. Direxion's use of this Russia index is a clear
indication of where the company wants to go next-and that's into
the business of index licensing to ETF issuers, company officials
From Direxion's point of view, the company only linked its
bull-and-bear Russia strategies to the same index behind RSX to
keep RUSS and RUSL closely linked to that Van Eck ETF, a Direxion
executive told IndexUniverse.
"Although we officially track the index, we strive to track very
closely-to plus or minus 3X-the ETF," the executive said. "Among
other reasons, this helps the market makers that may choose to use
RSX to hedge their positions in RUSL/RUSS."
Direxion's other international equity bull-and-bear pairs of
leveraged funds rely on a variety of indexes from such providers as
MSCI, S&P, Indus and BNY Mellon.
New Index Brings Faster Access To New Securities
On the surface, the index change shouldn't affect any of the
funds' performances or their portfolios, executives for the various
companies involved said. Both indexes have yielded nearly identical
results since last summer when the Market Vectors index went
Still, there are some differences worth noting. Among them, and
perhaps most significantly, is that the Market Vectors Russia Index
reconstitutes quarterly, whereas its predecessor did so
semiannually. For investors, that means access to new eligible
securities more quickly than before, Van Eck's marketing director
Ed Lopez told IndexUniverse.
Another key difference is that while the new index doesn't
necessarily expand on the coverage of the DAXGlobal index, it does
go beyond locally listed securities to include offshore companies
that derive at least half their revenues from doing business in
The new index also turns to American depositary receipts to
ensure tradability and liquidity of its holdings, Lopez said. ADRs
are often more liquid than local stocks, he mentioned.
Van Eck first announced it would be switching indexes on the
five-year-old $2.16 billion RSX in January.
Direxion's RUSL and RUSS, which are designed to serve up three
times the daily performance of their index-or its inverse-first
came to market in May 2011, and have gathered $22.7 million and
$7.5 million in assets, respectively.
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