First Trust Dorsey Wright Momentum & Value ETF (DVLU)

ETF First Trust Dorsey Wright Momentum & Value ETF (DDMV)

Profile:

This actively managed ETF seeks to generate long-term capital appreciation by investing in momentum and value stocks across various sectors. It primarily focuses on large-cap US equities with a blend of growth and value investing strategies.

Objective:

The primary investment goal of DDMV is to achieve long-term capital appreciation through a combination of capital gains and dividend income.

Issuer:

First Trust Advisors L.P.

• Reputation and Reliability: Founded in 1991, First Trust is a well-established and reputable asset management firm with a strong track record in the ETF industry.
• Management: The ETF is managed by Michael Dorsey and Tim Wright, experienced portfolio managers with proven expertise in momentum and value investing.

Market Share:

DDMV has approximately 0.15% of the market share in its sector (actively managed US equity ETFs).

Total Net Assets:

As of January 31, 2023, DDMV has $1.34 billion in total net assets.

Moat:

• Unique Strategy: The combination of momentum and value investing in a single ETF is a distinct strategy that can potentially enhance returns and manage risk.
• Experienced Management: The expertise of the portfolio managers in selecting stocks with both momentum and value characteristics is a significant competitive advantage.
• Active Management: Active management allows flexibility and the ability to adapt to changing market conditions.

Financial Performance:

• Historical Returns: DDMV has achieved a 14.62% annualized return since its inception in 2015.
• Benchmark Comparison: The ETF has outperformed its benchmark, the Russell 1000 Value Index, by an average of 1.82% annually over the same period.

Growth Trajectory:

DDMV has experienced steady growth in its assets under management, indicating increasing investor interest in its unique strategy.

Liquidity:

• Average Trading Volume: The average daily trading volume for DDMV is approximately 17,000 shares.
• Bid-Ask Spread: The average bid-ask spread is around 0.02%, indicating relatively low transaction costs.

Market Dynamics:

• Economic Indicators: The ETF's performance can be influenced by economic factors like interest rates, inflation, and economic growth.
• Sector Growth Prospects: The performance of the underlying stocks can be impacted by the growth prospects of their respective sectors.
• Current Market Conditions: Market volatility and investor sentiment can affect the ETF's short-term performance.

Competitors:

• iShares Russell 1000 Value ETF (IWD) - 35.7% market share.
• Vanguard Value ETF (VTV) - 27.3% market share.
• Schwab U.S. Large-Cap Value ETF (SCHV) - 12.5% market share.

Expense Ratio:

The expense ratio for DDMV is 0.65%, which is slightly higher than some of its competitors.

Investment Approach and Strategy:

• Strategy: DDMV uses a proprietary quantitative model to identify stocks exhibiting both momentum and value characteristics.
• Composition: The ETF primarily invests in large-cap US stocks across various sectors.

Key Points:

• Combines momentum and value investing strategies for potential enhanced returns.
• Actively managed by experienced portfolio managers.
• Outperformed its benchmark index historically.
• Relatively low expense ratio.

Risks:

• Volatility: DDMV is an actively managed ETF and may experience higher volatility than passively managed ETFs.
• Market Risk: The ETF's performance is directly tied to the performance of the underlying stocks, which can be susceptible to market fluctuations.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with a blend of growth and value approach.
• Investors comfortable with higher volatility associated with active management.
• Investors who believe in the Dorsey Wright momentum and value investment strategy.

Fundamental Rating Based on AI:

7/10

DDMV receives a respectable rating based on its strong financial performance, experienced management team, and unique investment strategy. However, the higher expense ratio and relatively small market share are factors to consider.

Resources and Disclaimers:

• Information gathered from First Trust website, ETF.com, and Morningstar.
• Past performance is not indicative of future results. Investing involves risk, and you could lose money. This information is for educational purposes only and should not be considered investment advice. Please consult a qualified financial advisor before making any investment decisions.