Trash is big business. But exchange-traded fund sponsor Direxion hopes a lack of trash will be a big business all its own, and it has put that faith into a new product it launched today.

The Direxion World Without Waste ETF (WWOW) tracks the Indxx US Circular Economy Index containing companies playing on the theme of resource conservation, specifically the “three R’s” of reducing, reusing and recycling. 

But the idea is about more than recycling. It’s about fundamentally transforming the economy from something “linear” to one that’s more “circular” in the way it handles resources.

“There’s been a real focus on clean energy and recycling and the like,” said Robert Nestor, president of Direxion. “This fund fits into that category, but it’s a little more directed. The whole concept centers on this idea of a circular economy. And it’s not just recycling on the back end, but actually designing for reuse on the front end.”

The index’s constituents get at least 50% of their revenue from one of the following five sub-themes that fit this circular economy narrative:

1) They are focused on the sustainability of resources. Such companies are involved with solar, wind or hydropower energy, geothermal energy, biomass, biofuels, agriculture science or energy-efficient solutions.

2) The companies share platforms. In other words, they can boost the utilization rate of products by sharing their use/access/ownership. Such activity includes peer-to-peer lending, space/knowledge/content/talent sharing, crowdfunding, collaborative platforms and software, platforms or infrastructure as services.

3) They are involved in resource recovery. Such companies include waste management concerns that recover useful resources/energy out of disposed products or byproducts.

4) They offer products as a service. These companies’ operations are based on subscription-based revenue models.

5) They extend product life cycles. Such companies extend the working life of products and components by repairing, upgrading and reselling products or components.

The index includes the top 10 companies from each of these categories according to the largest total market capitalization. If there are fewer than 10 companies in a category, companies from the other categories would be added so the list adds up to 50.

The index is equal-weighted and rebalanced and reconstituted annually. The fund’s net expense ratio is 0.50%.

The top five holdings in the fund are German e-commerce platform Jumia Technologies AG, solar energy company Enphase Energy, electric vehicle maker Tesla Inc., e-commerce site Etsy Inc. and social media company Snap Inc. (It’s important to remember that equal-weighted indexes become unequal during rebalancing.)

For Direxion, whose forte has long been leveraged and inverse ETFs, the WWOW fund is its latest effort to diversify its product lineup and appeal to a broader investor audience—including financial advisors.

As part of that effort, this year it has rolled out several thematic funds designed to capture ongoing economic trends. That includes the Direxion Flight to Safety Strategy ETF (FLYT), which aims for risk mitigation from equity market drawdowns while also providing long-term appreciation potential by combining long-term U.S. Treasury bonds, utility stocks and gold bullion.

It also includes the Direxion Connected Consumer ETF (CCON), which offers exposure to companies across four technology pillars that stand to benefit from consumers connecting to products and services in new ways, especially virtually.

But two funds in particular have seemed to resonate with investors. One is the Direxion Moonshot Innovators ETF (MOON), which invests in what are considered the 50 most innovative U.S. companies at the forefront of changing how people live, and which have the potential to disrupt existing technologies or industries. This fund launched a month ago and already has more than $24 million in assets.

The other is the Direxion Work From Home ETF (WFH), which holds companies that stand to benefit from an increasingly flexible work environment. These companies work in the areas of cloud technologies, cybersecurity, online project and document management, and remote communications. WFH debuted in June and has $161.7 million in assets.

All told, these thematic funds have roughly $220 million in assets. That’s a drop in the bucket in Direxion’s overall ETF asset base of $18.2 billion. But Nestor says Direxion has big goals for its thematic ETF efforts.

“We think the thematics category offers a lot of runway in the ETF business,” he said. “It’s still a relatively small segment of the ETF space, but it’s growing something like three times the broader ETF business, which itself is growing rapidly."

As for the role thematic ETFs can play in investor portfolios, Nestor offered that it depends on an individual investor's goals. But for now, he acknowledges, they typically occupy the periphery of equity allocations dominated by core holdings such as broad-based index funds.

“I think it’ll remain that way for a while, but some of these thematics could eventually migrate into the core,” said Nestor, adding that investors increasingly are seeking opportunities tied to cutting-edge trends that could alter the economy and how people live.