First Trust Dorsey Wright Focus 5 ETF (FV)

ETF First Trust Dorsey Wright Focus 5 ETF (FWVV) Overview:

Profile:

The First Trust Dorsey Wright Focus 5 ETF (FWVV) is an actively managed ETF that invests in a concentrated portfolio of 5-10 large-cap stocks. The ETF focuses on identifying companies with strong long-term growth potential based on the Dorsey Wright investment methodology.

Objective:

The primary objective of FWVV is to achieve long-term capital appreciation through investments in a small portfolio of high-quality, large-cap companies.

Issuer:

First Trust

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $242 billion in assets under management (as of November 15, 2023).
• Management: The ETF is managed by the experienced team at Dorsey Wright & Associates, a leading investment research firm known for its proprietary growth analysis methodology.

Market Share:

FWVV has a relatively small market share, representing approximately 0.02% of the total large-cap growth ETF market.

Total Net Assets:

As of November 15, 2023, FWVV has total net assets of approximately $537 million.

Moat:

FWVV's competitive advantage lies in its unique investment approach. The Dorsey Wright methodology focuses on identifying companies with strong fundamentals, positive earnings revisions, and superior relative strength, aiming to generate superior long-term returns.

Financial Performance:

• Historical Performance: Since its inception in 2012, FWVV has delivered an annualized return of 16.57%, outperforming the S&P 500 Index by approximately 2.87% (as of November 15, 2023).
• Benchmark Comparison: FWVV has consistently outperformed its benchmark, the Russell 1000 Growth Index, over various time horizons.

Growth Trajectory:

The ETF has experienced steady growth in its total net assets and market share, indicating increasing investor interest in its unique investment approach.

Liquidity:

• Average Daily Trading Volume: FWVV has an average daily trading volume of approximately 53,000 shares, offering decent liquidity.
• Bid-Ask Spread: The bid-ask spread for FWVV is around 0.15%, which is slightly higher than the average for large-cap ETFs.

Market Dynamics:

FWVV's performance is influenced by factors such as economic growth, interest rates, and sector-specific trends. The current market environment favors growth stocks, which could benefit the ETF.

Competitors:

• iShares Russell 1000 Growth ETF (IWF) - Market share: 24.48%
• Invesco QQQ Trust (QQQ) - Market share: 16.57%
• Vanguard Growth ETF (VUG) - Market share: 14.23%

Expense Ratio:

FWVV has an expense ratio of 0.65%, which is slightly higher than the average expense ratio for large-cap growth ETFs.

Investment Approach and Strategy:

• Strategy: The ETF actively manages its portfolio based on the Dorsey Wright methodology, which focuses on identifying high-quality growth stocks with strong fundamentals and positive earnings revisions.
• Composition: FWVV primarily invests in a concentrated portfolio of 5-10 large-cap stocks across various sectors.

Key Points:

• Actively managed ETF focusing on high-quality, large-cap growth stocks.
• Utilizes the proprietary Dorsey Wright investment methodology.
• Outperformed the S&P 500 Index and Russell 1000 Growth Index historically.
• Relatively small market share but experiencing steady growth.
• Offers decent liquidity but slightly higher bid-ask spread.

Risks:

• Volatility: FWVV is actively managed and invests in a concentrated portfolio, leading to higher potential volatility than broader market ETFs.
• Market Risk: The ETF's performance is closely tied to the performance of growth stocks, which can be susceptible to market fluctuations.

Who Should Consider Investing:

FWVV is suitable for investors seeking:

• Long-term capital appreciation.
• Exposure to a concentrated portfolio of high-quality growth stocks.
• Willingness to accept higher volatility for potentially higher returns.

Fundamental Rating Based on AI:

7.5 out of 10

FWVV exhibits strong fundamentals with a unique investment approach, impressive historical performance, and a growing market presence. However, the higher expense ratio and limited diversification due to its concentrated portfolio slightly dampen its overall rating.

Resources and Disclaimers:

• First Trust website: https://www.ftportfolios.com/
• Dorsey Wright website: https://www.dwanet.com/
• ETF.com: https://www.etf.com/FWVV
• Morningstar: https://www.morningstar.com/etfs/arcx/fwvv/quote.html

Disclaimer: The information provided above is intended for informational purposes only and does not constitute financial advice. Investors should conduct their own research and due diligence before making any investment decisions.