Profit in Any Direxion

Ed Egilinsky’s job just got a bit easier—thanks in part to 2008. For over 20 years, he’s spread the word on the importance of including non-correlated asset classes in the investment portfolio, and it only took the worst global economic crisis in the history of the world for his effort and education to pay off.

“[When] most people think alternatives, they don’t necessarily think mitigating risk,” he says. “But currencies, commodities, managed futures; they tend to actually reduce risk. Hopefully, they enhance returns as well, but reducing risk is the way institutions have used them for decades, first and foremost.”

As managing director and head of alternative investments at Direxion Funds, Egilinsky’s latest project is the firm’s Currency Trends Strategy Fund (DXFTX). With market volatility, Europe and continued global uncertainty, it’s getting attention.

“One of the things that we’re looking to do at Direxion is build out a suite of buy-and-hold alternative strategies, whether its commodities, managed futures or, in this case, currencies,” he explains. “The Currency Trends Strategy Fund specifically gives clients exposure to 11 different currencies, including those of developed markets, emerging markets and commodity-based countries.”

What makes it unique is that this replicates a long-short currency index, the only mutual fund that actually provides clients with a rules-based index approach to currency and investing that takes advantage of a rising or falling dollar. The methodology looks at price trends to determine whether each of the individual currencies that make up the index can be long or short against the dollar on a monthly basis. It offers a unique investment opportunity for today’s investors to gain access to a diversified basket of currencies not previously available to retail investors.

And unlike other currency funds, he adds, the Direxion Currency Trends Strategy Fund has no exposure to sovereign debt instruments, which could have credit risk.

“The key for us is directional volatility,” he says. “It doesn’t matter which direction you have, it’s an all-weather fund. It likes volatility, but if the ride does begin to smooth out, it can take advantage of that as well.”

Egilinsky started out as a biology major before getting sidetracked with alternatives, but the skill set translates. He’s held various senior sales and management roles throughout his career and has been involved with product development, most notably with (no surprise) Rydex.

“I headed up our alternative strategy area there and was involved in some of the first-to-marketplace strategies like managed futures in a mutual fund structure, hedge fund replication and long-short commodity strategies,” he says.

So why not go to Arrow Funds with all the other Rydex alums?