Strategic Beta ETF's are growing fast. Direxion President Brian Jacobs says ETF investors are no longer at 'war', with strategic beta ETF's combining passive ETF's and active managers.

SHOWS: NEW YORK, USA (SEPTEMBER 25, 2014) (REUTERS - ACCESS ALL)

1. DIREXION, PRESIDENT, BRIAN JACOBS, SAYING:

JOURNALIST ASKING BRIAN JACOBS: 'We are going to talk about some of your strategic beta ETF's, that is a category of ETF's growing faster than plain vanilla, so let's start with a quick explainer of what that means and why are we seeing rapid growth in this area?'

JACOBS: 'Strategic beta ETF's utilize the best ideas from both basic passive ETF's and active managers that combine them in one strategy. It is really interesting, over the past 15 years there has a been a bit of a war going on between passive investing and active investing, with both individual investors and financial advisors that serve them. That war is over. In both cases, both passive and active are being used by advisors and investors today, except the results of those two strategies have come together in this new hybrid approach which is called strategic beta, essentially you take an individual index but alter it using a rules based approach many times, the same type of strategy an active manager might use. So it comes together in an ETF that is transparent, liquid, relatively inexpensive, yet provides either a higher return than the index, lower volatility than a particular index, or additional income, the three main outcomes individual investors are looking for today.'

JOURNALIST: 'So let's do a couple of case and points with your ETF's, the All Cap Insider Sentiment ETF. It had a strong performance so far this year, outperformed the S&P 500. What's the advantage with something like this, you're trying to play on what the insiders are doing, and that I guess is giving an investor an advantage they don't normally have?'

JACOBS: 'Right, so essentially you're sorting through the basic index but then going further and saying OK, let's take a look at insider trading, and that insider trading gives you an idea of what might be a more attractive stock to own versus the entire index. By being able to do that, and do that methodically and repeatedly, you are able to generate an attractive return which is exemplified in the performance we have seen so far.'