We have covered FV (First Trust Dorsey Wright Focus 5, Expense Ratio 0.94%, $2.5 billion in AUM) in the past in this column, as the fund has attained a 4-star Morningstar ranking currently, but it has seen some mild profit taking year-to-date (-$220 million out via redemptions).
At one time FV was the largest ETF offered by issuer First Trust in terms of assets under management, but as asset flows and AUM levels are constantly in flux in ETF world, that is no longer the case and the fund trails the $3.3 billion FVD (First Trust Value Line Dividend, Expense Ratio 0.70%) and the $4 billion FDN (First Trust Dow Jones Internet, Expense Ratio 0.57%).
First Trust offers one hundred fifteen ETFs, many of which likely fly under the radar to most investors and portfolio managers, but the issuer does have a total of thirteen ETFs that are larger than the $1 billion level in terms of assets under management. Back to FV, fund literature suggests that the ETF tracks the Dorsey Wright Focus Five Index which is a sector based strategy “using the DWA proprietary relative strength methodology, the ETFS are compared to each other to determine inclusion by measuring each ETF’s price momentum relative to other ETFs in the universe.”
This being a “Fund of Fund” ETF, the underlying holdings are made up of other First Trust products, notably sector plays. In fact, the top holding presently (over 20% weighting) in FV is in the aforementioned FDN, clearly helping to contribute to the fund’s overall asset levels and supremacy within First Trust as the largest ETF (in AUM terms) offered currently. The other four weightings in FV are as follows: QTEC (First Trust NASDAQ-100 Technology Sector, Expense Ratio 0.60%, $1.8 billion in AUM 19.98% weighting), FXR (First Trust Industrials/Producer Durables AlphaDEX, Expense Ratio 0.67%, $1.4 billion in AUM, 19.92% weighting), FTXO (First Trust Nasdaq Bank, Expense Ratio 0.60%, $947 million in AUM, 19.87% weighting), and FXU (First Trust Utilities AlphaDEX, Expense Ratio 0.70%, $1.6 billion in AUM, 19.81% weighting).
Fund literature also states that “The relative strength analysis is conducted twice monthly. ETFs are replaced when they fall sufficiently out of favor, based on their relative strength, versus the other ETFs within the universe. The index is rebalanced so each position is equally weighted.”
Clearly, the growth of FV in terms of asset size and popularity boosts the respective asset growth of the First Trust sector funds that are currently within the portfolio on a relative strength basis to the benefit of the issuer.
The First Trust Dorsey Wright Focus 5 ETF (NASDAQ:FV) was trading at $23.95 per share on Thursday afternoon, up $0.10 (+0.42%). Year-to-date, FV has gained 3.50%, versus a 5.41% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.