First Trust Horizon Managed Volatility Domestic ETF (HUSV)

Overview

The First Trust Horizon Managed Volatility Domestic ETF (HUSV) seeks to provide investment results that correspond to the performance of the Horizon Managed Volatility Domestic Index. The fund aims to provide downside protection during times of market volatility by dynamically adjusting its exposure to U.S. equities.

Reputation and Reliability

First Trust is a well-established ETF provider with a solid reputation. They offer a broad range of innovative and actively managed ETFs.

Management Expertise

First Trust has a team of experienced investment professionals managing their ETFs, leveraging quantitative and qualitative analysis to achieve fund objectives.

Goal

To provide investment results that correspond to the performance of the Horizon Managed Volatility Domestic Index.

Investment Approach and Strategy

Strategy: The ETF tracks an index that adjusts its exposure to U.S. equities based on market volatility.

Composition The ETF primarily holds U.S. equities and may also invest in cash or cash equivalents.

Market Share: The ETF's market share within the managed volatility space is moderate and has room to grow.

Total Net Assets (AUM): 115000000

Key Competitors

• Invesco S&P 500 Downside Hedged ETF (SPHD)
• AGF U.S. Market Neutral Anti-Beta ETF (BTAL)
• Simplify US Equity PLUS Downside Convexity ETF (SPYC)

Competitive Landscape

The managed volatility ETF landscape is competitive, with several ETFs offering different approaches to managing downside risk. HUSV's dynamic allocation strategy provides a unique approach compared to some competitors but can result in higher expense ratio than passively managed peers. HUSV's advantages include a focus on domestic equities and active volatility management, potentially outperforming during market downturns, but may underperform during strong bull markets.

Historical Performance: Performance varies depending on the market conditions, generally outperforming during downturns but underperforming during strong uptrends.

Benchmark Comparison: The ETF's performance should be compared to a benchmark that reflects its managed volatility strategy, such as a blend of equity and cash indices.

Expense Ratio: 0.28

Average Trading Volume

The ETF exhibits moderate liquidity with daily trading volume, which could impact execution costs for larger trades.

Bid-Ask Spread

The bid-ask spread is typically tight, reflecting its overall moderate liquidity.

Market Environment Factors

Economic indicators like inflation, interest rates, and overall market sentiment influence the ETF's performance. Changes in equity market volatility also impact its allocation strategy.

Growth Trajectory

Growth trends depend on investor demand for downside protection. Any shifts in investment strategies and holdings based on volatility adjustments may affect future performance.

Competitive Edge

HUSV benefits from its dynamically managed volatility approach, providing a level of downside protection not found in standard equity ETFs. This flexibility enables it to adjust its exposure to equities based on market conditions, potentially mitigating losses during market downturns. Additionally, First Trust's experience and resources contribute to its strategic execution. A lower volatility approach might also reduce investor stress during periods of market turbulence, encouraging longer-term investments.

Volatility

HUSV exhibits lower volatility compared to the broader market, reflecting its managed volatility approach. However, this also means that it will likely underperform during bull markets.

Market Risk

The ETF is exposed to the risk of U.S. equity markets and changes in market volatility. Economic downturns and unexpected geopolitical events can negatively impact its performance.

Ideal Investor Profile

The ETF is suitable for investors seeking to manage downside risk in their portfolio. Investors concerned about market volatility and who value capital preservation over aggressive growth would be suitable for this ETF.

Market Risk

The ETF is suitable for long-term investors seeking to reduce portfolio volatility, and those who want some equity exposure but prefer a more cautious approach.

The First Trust Horizon Managed Volatility Domestic ETF offers a unique approach to investing in U.S. equities by actively managing volatility. HUSV seeks to limit downside risk during market downturns, making it an appealing choice for risk-averse investors. While it may underperform during bull markets, it is designed to offer more stable returns over the long term. Its dynamic allocation strategy and relatively low expense ratio compared to actively managed ETFs, make it a competitive option for those seeking downside protection.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar
• Yahoo Finance

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market data is subject to change.