First Trust Dorsey Wright Momentum & Low Volatility ETF (DVOL)

Overview

The First Trust Dorsey Wright Momentum & Low Volatility ETF (DWLV) seeks to provide investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an index called the Dorsey Wright Momentum Plus Low Volatility Index. It focuses on U.S. equity securities with favorable momentum characteristics and relatively low volatility.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong reputation for innovation and quality products.

Management Expertise

First Trust has a dedicated team of experienced professionals managing its ETF offerings.

Goal

To track the performance of the Dorsey Wright Momentum Plus Low Volatility Index.

Investment Approach and Strategy

Strategy: Tracks an index. The Dorsey Wright Momentum Plus Low Volatility Index is designed to identify equity securities that have exhibited superior relative strength (momentum) characteristics and that also exhibit relatively lower volatility.

Composition Primarily holds U.S. equity securities.

Market Share: DWLV's market share is moderate within the low volatility ETF segment.

Total Net Assets (AUM): 2292000000

Key Competitors

• Invesco S&P 500 Low Volatility ETF (SPLV)
• iShares MSCI USA Min Vol Factor ETF (USMV)
• Franklin U.S. Low Volatility High Dividend ETF (LVHD)

Competitive Landscape

The low volatility ETF market is competitive, with several large players. DWLV differentiates itself by incorporating momentum as a factor in addition to low volatility. This could offer an advantage during certain market conditions but also potentially increase risk compared to purely low volatility strategies.

Historical Performance: Historical performance data should be reviewed independently as it's subject to change and past performance doesn't guarantee future results.

Benchmark Comparison: Performance should be compared to the Dorsey Wright Momentum Plus Low Volatility Index to gauge effectiveness.

Expense Ratio: 0.058

Average Trading Volume

DWLV exhibits moderate average trading volume, indicating reasonable liquidity.

Bid-Ask Spread

The bid-ask spread is generally tight, reflecting good tradability.

Market Environment Factors

Economic conditions, interest rates, and investor sentiment towards risk all influence DWLV. Sector growth prospects and momentum trends also significantly affect its performance.

Growth Trajectory

DWLV's growth trajectory depends on the continued demand for low volatility strategies and the effectiveness of its momentum-based selection process. Changes in the underlying index methodology could also impact its performance.

Competitive Edge

DWLV's competitive advantage lies in its unique combination of momentum and low volatility factors. This dual-factor approach aims to capture upside potential while mitigating downside risk, potentially appealing to investors seeking a balance between growth and stability. Its use of the Dorsey Wright methodology also provides a differentiated stock selection process. These factors could lead to outperformance during specific market environments when momentum is rewarded within a low-volatility context.

Volatility

DWLV's historical volatility should be assessed relative to its benchmark and other low volatility ETFs.

Market Risk

Specific risks include market downturns, sector-specific risks related to its holdings, and the potential for the momentum factor to underperform during certain market cycles.

Ideal Investor Profile

DWLV is suitable for investors seeking a balance between growth and downside protection. It might be attractive to those who are risk-averse but still want some exposure to market upside.

Market Risk

DWLV is suitable for long-term investors seeking a core holding with a focus on downside protection. It can be used as part of a diversified portfolio.

The First Trust Dorsey Wright Momentum & Low Volatility ETF (DWLV) combines momentum and low volatility factors to provide a unique investment strategy. It aims to capture upside potential while mitigating downside risk, making it suitable for risk-averse investors seeking balanced growth. The ETF tracks the Dorsey Wright Momentum Plus Low Volatility Index, focusing on U.S. equity securities with favorable momentum and relatively low volatility. It competes in the low volatility ETF market with established players like SPLV and USMV but differentiates itself with its dual-factor approach. Investors should consider its historical performance, expense ratio, and risk profile before investing.

Data Sources:

• First Trust
• ETF.com
• Morningstar

Disclaimers:

This analysis is for informational purposes only and does not constitute investment advice. Investment decisions should be made based on individual circumstances and consultation with a qualified financial advisor. Data is subject to change.