First Trust Dorsey Wright International Focus 5 ETF (IFV)

Overview

The First Trust Dorsey Wright International Focus 5 ETF (IFV) is an actively managed exchange-traded fund that seeks to provide capital appreciation by investing in a concentrated portfolio of international equities. It focuses on companies with strong relative strength characteristics, aiming to identify and hold securities that are outperforming their peers.

Reputation and Reliability

First Trust Portfolios is a well-established ETF provider with a diverse range of products and a solid reputation in the investment management industry.

Management Expertise

The ETF is managed by Dorsey, Wright & Associates, LLC, a firm with a long-standing history of employing quantitative research and a focus on relative strength investing principles.

Goal

To achieve long-term capital appreciation by investing in a diversified portfolio of international equities selected based on a proprietary relative strength methodology.

Investment Approach and Strategy

Strategy: The ETF aims to identify and invest in companies demonstrating superior relative strength, meaning they are outperforming their peers in terms of price momentum. This is not an index-tracking ETF.

Composition The ETF primarily holds a concentrated portfolio of international equities, focusing on developed and emerging markets. The specific holdings are dynamic and subject to change based on the relative strength methodology.

Market Share: N/A - Market share data for specific niche ETFs like IFV is not readily available or meaningful in the same way as broad market index ETFs.

Total Net Assets (AUM): 235800000

Key Competitors

• iShares MSCI EAFE ETF (EFA)
• Vanguard FTSE Developed Markets ETF (VEA)
• iShares Core MSCI International Developed Markets ETF (IXUS)

Competitive Landscape

The international equity ETF market is highly competitive, dominated by large players offering broad diversification and low expense ratios. IFV differentiates itself through its active management and focus on relative strength, targeting investors seeking a more dynamic approach to international investing. Its smaller AUM and active strategy may present higher expense ratios and less liquidity compared to passive behemoths, but its concentrated approach could lead to outperformance if the strategy is successful.

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Expense Ratio: 0.75

Average Trading Volume

The ETF generally has a moderate average trading volume, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread for IFV is typically tight enough for most retail investors, though it can widen during periods of high market volatility.

Market Environment Factors

IFV is influenced by global economic growth, currency fluctuations, geopolitical events in international markets, and the overall risk appetite of investors. Sector-specific trends in developed and emerging markets also play a significant role.

Growth Trajectory

The ETF's growth trajectory is tied to the success of its relative strength methodology in identifying outperforming international equities. Changes in strategy are inherent due to its active management, with holdings frequently rebalanced based on momentum signals.

Competitive Edge

IFV's primary competitive edge lies in its active management strategy employing the Dorsey Wright relative strength methodology. This approach aims to systematically identify and capitalize on momentum in international markets, potentially offering a different risk-return profile than passive index funds. The concentrated portfolio allows for focused bets on companies with strong performance trends.

Volatility

IFV exhibits moderate to high historical volatility, consistent with its focus on equities and its active, concentrated approach.

Market Risk

The ETF is exposed to market risk associated with international equities, including currency risk, political instability, and economic downturns in the regions it invests in. The concentration of holdings can also amplify specific stock or sector risks.

Ideal Investor Profile

The ideal investor for IFV is one seeking exposure to international equities with an active, momentum-based strategy. This investor should have a higher risk tolerance and be comfortable with concentrated portfolios.

Market Risk

IFV is best suited for long-term investors who believe in the efficacy of relative strength investing and are looking for potential alpha generation in international markets. It may also appeal to active traders willing to monitor its dynamic holdings.

The First Trust Dorsey Wright International Focus 5 ETF (IFV) is an actively managed fund that invests in international equities with strong relative strength. While it faces competition from larger, passive ETFs, its unique strategy aims for capital appreciation by riding momentum. Its historical performance shows some outperformance against its benchmark over certain periods, but it comes with higher expense ratios and moderate to high volatility, making it suitable for investors with a higher risk tolerance seeking active international exposure.

Data Sources:

• First Trust Portfolios website
• Financial data aggregators (e.g., Morningstar, ETF.com)

Disclaimers:

This information is for educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should conduct their own due diligence before making any investment decisions.