Brian Jacobs: Direxion's new direction

Jun 18, 2014 @ 12:00 am

Runtime: 2:55

After building its business focused on leveraged ETFs, Direxion's new president, Brian Jacobs, says the firm wants to expand its focus and product lineup to target RIAs. How can the firm succeed in a crowded market?

Video Transcript

[MUSIC] The vision for Direxion Investments is very exciting. Historically, the firm has been known for its levered and inverse ETFs. And today, we manage well over $8 billion in those types of products as well as strategic beta and alternative mutual funds. But our vision going forward is to become more important to financial advisers. And the way we'd like to do that is to really help financial advisers solve for outcomes, better outcomes. That's the combination of unique strategies in terms of ETFs and mutual funds. As well as the advice and guidance we can provide via our quantitative portfolio strategy. As we look at the evolving business model of the financial adviser. We see three key changes that we think that should impact the way that we help advisers going forward. Number one, we see that more than ever before, advisors are managing towards an outcome as opposed to relative returns for investors. Number two, we see advisers using more sophisticated products like alternatives than ever before. And number three, by a very large margin, fee based and that is an asset allocation approach to investing is the overwhelming business model. For financial advisers going forward, as opposed to a brokered structure. Therefore as we think about that we need to be able to help advisers achieving those outcomes for their clients. Help them use new strategies that they may not have used in the past. And also put it in the context of asset allocation model. That is not just here's my product, but how that product will help the adviser achieve the outcome his or her client is looking for. There's two key areas that direction is looking for over the next few months, to add products that financial advisers might find attractive. Number one, what we call strategic beta. These are enhanced indexes, that provide exposure to a particular index like the S&P 500. But do it in an enhanced way that provide you their additional alpha or reduced volatility. So a way to build a better portfolio at a reasonable cost. Yet achieve a goal over and above what you might get in a standard market cap weighted index. The second area we're looking at is actively managed strategies, both in an ETF or in a mutual fund. We haven't had actively managed firms in any size in the past, and we feel were in a very good position giving our product platform. That is we have the acceptive relief to do any type of ETF that a fund would need. Or a mutual fund, we have a very good, broad mutual fund platform. So, given our capability to create products,. We're actively looking at active managers as well as a strategic beta area to help advisers build better outcomes for their customers. [MUSIC]


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