Since coming to market just over three years ago, the First Trust Dorsey Wright Focus 5 ETF (FV) has proven popular with advisors and investors that follow Dorsey Wright's relative strength-based strategies.
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That sentiment is confirmed by FV's more than $2.4 billion in assets under management. FV follows the Dorsey Wright Focus Five Index, which is designed to provide targeted exposure to five First Trust sector and industry based ETFs that Dorsey, Wright & Associates (DWA) believes offer the greatest potential to outperform the other ETFs in the selection universe and that satisfy trading volume and liquidity requirements, according to First Trust.
FV has a counterpart that is proving popular as well. The First Trust Dorsey Wright Dynamic Focus 5 ETF (FVC) adds a cash component to the ETF of ETFs strategy found in FV.
More About FVC
Like FV, the First Trust Dorsey Wright Dynamic Focus 5 ETF holds five First Trust sector and industry that are displaying positive relative strength ETFs. FVC's linuep is as follows: The First Trust Dow Jones Internet Index Fund (FDN), First Trust NASDAQ-100-Technology Sector Index Fund (QTEC), First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), First Trust Nasdaq Bank ETF (FTXO) and the First Trust Utilities AlphaDEX Fund (FXU).
While we are pitted firmly in corporate earnings season now as we have repeatedly documented in this daily piece, a fund such as FVC may be potentially very useful in monitoring how various sectors are reacting to earnings hits and misses around the markets and how these industries are trading relative to one another since they are constantly in motion, said Street One Financial Vice President Paul Weisbruch in a recent note.
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FVC's index is designed to provide targeted exposure to five First Trust sector and industry based ETFs and the Nasdaq US T-Bill Index, according to First Trust.
Slight Differences ... So Far
Year to date, FV is up 9.4 percent while FVC is higher by 9.1 percent, indicating that the latter's cash component is not restraining its ability to compete with the former's returns this year.
FVC debuted in March 2016 and has established a solid following as highlighted by $331.1 million in assets under management. Regarding FV and FVC, investors should stay up-to-date regarding possible changes in the ETFs' rosters.
Of course, being a rules-based strategy it is helpful to look at these holdings a couple times per month to see if there have been any relative strength changes in the marketplace that warrant a reshuffling of the portfolio and perhaps this will lend clues to which names/sectors will be shorter and longer term leaders and laggards, added Weisbruch.
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