First Trust Dorsey Wright Focus 5 ETF (FV)

Overview

The First Trust Dorsey Wright Focus 5 ETF (FV) is designed to provide investment results that correspond generally to the price and yield of an index called the Dorsey Wright Focus Five Index. It achieves this by investing in a portfolio of other First Trust ETFs, selected based on relative strength rankings within the Dorsey Wright methodology.

Reputation and Reliability

First Trust is a well-established ETF issuer with a strong track record. They are known for innovative and factor-based ETF strategies.

Management Expertise

First Trust has a dedicated team of investment professionals with expertise in ETF management and quantitative strategies.

Goal

To provide investment results that correspond generally to the price and yield of the Dorsey Wright Focus Five Index.

Investment Approach and Strategy

Strategy: The ETF uses a 'fund-of-funds' approach, investing in other First Trust ETFs based on relative strength analysis. It does not track a single specific index directly.

Composition The ETF primarily holds other First Trust sector and strategy ETFs. The underlying ETF holdings change periodically based on Dorsey Wright's relative strength ranking methodology.

Market Share: FVu2019s market share is small as itu2019s a niche ETF.

Total Net Assets (AUM): 497986113

Key Competitors

• Invesco DWA Momentum ETF (PDP)
• iShares MSCI USA Momentum Factor ETF (MTUM)
• SPDR Portfolio S&P 400 Mid Cap ETF (SPMD)

Competitive Landscape

The competitive landscape is made of ETFs that follows the Momentum factor and ETFs in the overall market. FV competes with ETFs by offering a dynamic, relative strength-based approach to asset allocation. Advantages of FV over its competitors include active selection of ETFs. Disadvantages include its higher expense ratio than broad market ETFs.

Historical Performance: Historical performance data is readily available from financial websites, but it's crucial to consider that past performance does not guarantee future results.

Benchmark Comparison: The ETF's performance can be compared to the Dorsey Wright Focus Five Index to evaluate its tracking effectiveness.

Expense Ratio: 0.94

Average Trading Volume

The ETF exhibits moderate liquidity with an average daily trading volume that allows investors to buy and sell shares efficiently.

Bid-Ask Spread

The bid-ask spread is typically moderate, indicating reasonable trading costs for investors.

Market Environment Factors

Economic indicators, sector growth, market sentiment, and interest rate changes can all affect FV. FV is reliant on the Dorsey Wright momentum based model to dictate its holdings.

Growth Trajectory

The growth trajectory depends on the continued adoption of tactical asset allocation strategies and the performance of the underlying First Trust ETFs.

Competitive Edge

FV's competitive edge lies in its unique application of the Dorsey Wright relative strength methodology in a 'fund-of-funds' structure. This approach allows it to dynamically allocate capital to sectors and asset classes exhibiting the strongest relative performance. The ETF offers exposure to a diversified portfolio of actively managed First Trust ETFs. The active management and dynamic allocation strategy differentiate it from passive index-tracking ETFs. The strategy aims to capitalize on market trends and potentially outperform traditional asset allocation strategies.

Volatility

FV's volatility depends on the volatility of its underlying ETF holdings and the overall market conditions. It is expected to have fluctuations.

Market Risk

Specific risks include market risk associated with equity investments, sector concentration risk, and the risk that the relative strength strategy may not perform as expected.

Ideal Investor Profile

FV is suitable for investors seeking a tactical asset allocation strategy with the potential for outperformance through relative strength analysis. Investors with a moderate to high risk tolerance and a time horizon of at least a few years would be the ideal candidate.

Market Risk

FV may be best suited for active traders or investors seeking to implement a dynamic asset allocation strategy, rather than passive index followers.

The First Trust Dorsey Wright Focus 5 ETF (FV) offers a unique investment strategy that dynamically allocates capital among other First Trust ETFs based on relative strength analysis. While it may offer potential for outperformance, it also carries a higher expense ratio and relies on the effectiveness of the Dorsey Wright methodology. The ETF's performance is influenced by market dynamics and the performance of the underlying ETFs it holds. Investors should carefully consider their risk tolerance and investment objectives before investing in FV. It can be a satellite holding for investors who believe in momentum style of investing.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.