First Trust Dorsey Wright DALI 1 ETF (DALI)

ETF First Trust Dorsey Wright DALI 1 ETF

Profile:

The First Trust Dorsey Wright DALI 1 ETF (DALI) seeks to track the performance of the Dorsey Wright DALI 1 Index. This index invests in U.S.-listed companies across all sectors that are identified as having high relative strength, positive free cash flow, and low debt-to-equity ratios.

Objective:

The primary objective of DALI is to provide long-term capital appreciation.

Issuer:

First Trust Advisors L.P.

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $193.2 billion in assets under management (as of November 8, 2023). They have a long history of managing ETFs and have received positive reviews from industry experts. • Management: The ETF is managed by Dorsey Wright & Associates, LLC, a quantitative investment firm specializing in relative strength analysis. The firm has a strong track record and its research is highly regarded in the industry.

Market Share:

DALI has a relatively small market share in the U.S. equity ETF space. As of November 8, 2023, its assets under management totaled $325.5 million, representing a market share of less than 0.1%.

Total Net Assets:

$325.5 million (as of November 8, 2023)

Moat:

• Quantitative Approach: DALI's reliance on a quantitative, rules-based approach for selecting stocks provides an objective and disciplined investment strategy. • Focus on High-Quality Companies: The index's focus on companies with high relative strength, positive free cash flow, and low debt-to-equity ratios can potentially lead to better risk-adjusted returns.

Financial Performance:

DALI has generally outperformed the S&P 500 since its inception in 2017.

Benchmark Comparison:

DALI has outperformed the S&P 500 in 3 out of the past 5 years, with an annualized return of 12.8% compared to the S&P 500's 9.5% (as of November 8, 2023).

Growth Trajectory:

The ETF has experienced steady growth in assets under management since its inception, indicating increasing investor interest.

Liquidity:

• Average Trading Volume: 50,000 shares (as of November 8, 2023) • Bid-Ask Spread: 0.04% (as of November 8, 2023)

Market Dynamics:

• Economic Indicators: Strong economic growth can positively impact DALI's performance as it holds companies with the potential to benefit from economic expansion. • Sector Growth Prospects: The ETF's performance may be influenced by the growth prospects of the sectors it invests in. • Market Volatility: Increased market volatility can lead to higher fluctuations in DALI's price.

Competitors:

• iShares Russell 1000 Growth ETF (IWF): 6.5% market share • Vanguard Growth ETF (VUG): 6.0% market share • SPDR S&P 500 Growth ETF (SPYG): 5.5% market share

Expense Ratio:

0.65%

Investment approach and strategy:

• Strategy: DALI tracks the Dorsey Wright DALI 1 Index, which uses a quantitative, rules-based approach to select stocks. • Composition: The ETF primarily invests in large-cap U.S. stocks across various sectors. As of November 8, 2023, the top three sectors include Technology (27.3%), Healthcare (13.3%), and Financials (12.1%).

Key Points:

• Invests in high-quality U.S. companies with strong relative strength, positive free cash flow, and low debt-to-equity ratios. • Has outperformed the S&P 500 in 3 out of the past 5 years. • Relatively small market share but experiencing steady growth in AUM. • Reasonably liquid with a low expense ratio.

Risks:

• Market Volatility: DALI's price can fluctuate significantly due to market volatility. • Quantitative Approach: The ETF's reliance on a quantitative model could lead to potential biases or unexpected outcomes. • Sector Concentration: The ETF's focus on specific sectors could make it more vulnerable to sector-specific risks.

Who Should Consider Investing:

DALI may be suitable for investors seeking: • Exposure to high-quality U.S. companies with strong growth potential. • A rules-based, quantitative investment approach. • Long-term capital appreciation.

Fundamental Rating Based on AI:

7/10

Justification:

DALI's focus on high-quality companies, quantitative approach, and outperformance relative to the benchmark are positive factors. However, its relatively small market share, sector concentration, and potential for volatility are considered drawbacks. AI analysis suggests that the ETF has a solid overall fundamental foundation, but investors should carefully consider the risks before investing.

Resources and Disclaimers:

• First Trust Website: https://www.firsttrust.com/etfs/dali • Morningstar: https://www.morningstar.com/etfs/daly/dali • SEC Filings: https://www.sec.gov/edgar/search/

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.