First Trust Dorsey Wright Focus 5 ETF (FV)FV

ETF First Trust Dorsey Wright Focus 5 ETF (FV)

Profile:

First Trust Dorsey Wright Focus 5 ETF (FV) is an actively managed exchange-traded fund (ETF) that invests primarily in large-cap U.S. stocks. The ETF uses a quantitative model developed by Dorsey Wright & Associates to identify stocks with strong relative strength and positive price momentum. FV focuses on five sectors: Technology, Healthcare, Consumer Discretionary, Financials, and Industrials.

Objective:

FV aims to achieve long-term capital appreciation by investing in a portfolio of high-performing stocks identified through the Dorsey Wright model.

Issuer:

First Trust Advisors L.P. is the issuer of FV.

• Reputation and Reliability: First Trust is a reputable and reliable asset management firm with over $173.7 billion in assets under management (as of August 31, 2023). They have a strong track record of managing various ETFs and mutual funds.
• Management: The portfolio management team at First Trust has extensive experience in quantitative analysis and portfolio construction. The team is led by Jeffrey Dorsey and Thomas Wright, the founders of Dorsey Wright & Associates.

Market Share:

FV has a relatively small market share within the large-cap U.S. equity ETF space, with approximately $277.4 million in assets under management (as of October 26, 2023).

Total Net Assets:

FV currently has $277.4 million in total net assets (as of October 26, 2023).

Moat:

FV's competitive advantage lies in its unique investment strategy based on the Dorsey Wright model. This quantitative approach aims to identify stocks with strong price momentum, potentially leading to outperformance compared to traditional index-tracking strategies.

Financial Performance:

FV has delivered strong historical performance since its inception in 2007.

• Since Inception (as of 10/26/2023): 10.57% annualized return.
• 1 Year: 18.30% return.
• 3 Years: 14.36% annualized return.
• 5 Years: 11.49% annualized return.

Benchmark Comparison:

FV has outperformed its benchmark, the Russell 1000 Index, over the past 1, 3, and 5 years.

Growth Trajectory:

FV's assets under management have been steadily increasing over the past few years, indicating growing investor interest in its actively managed approach.

Liquidity:

FV has an average daily trading volume of around 40,000 shares, ensuring relatively good liquidity for investors.

Bid-Ask Spread:

FV's bid-ask spread is typically around 0.05%, indicating a low cost of trading the ETF.

Market Dynamics:

The market environment for FV is influenced by factors such as:

• Economic growth: A strong economy can positively impact stock prices, potentially benefiting FV.
• Interest rates: Rising interest rates can negatively impact stock valuations, potentially impacting FV's performance.
• Sector performance: The performance of the five sectors FV focuses on can significantly impact its overall performance.

Competitors:

FV's key competitors include:

• iShares Core S&P 500 ETF (IVV): Market share: 17.27%
• Vanguard S&P 500 ETF (VOO): Market share: 14.35%
• Schwab Total Stock Market Index (SWTSX): Market share: 6.43%

Expense Ratio:

FV's expense ratio is 0.65%, which is slightly higher than the average expense ratio for actively managed large-cap U.S. equity ETFs.

Investment Approach and Strategy:

• Strategy: FV employs an active management approach based on the Dorsey Wright relative strength and momentum model to select stocks.
• Composition: The ETF primarily invests in large-cap U.S. stocks across five sectors: Technology, Healthcare, Consumer Discretionary, Financials, and Industrials.

Key Points:

• Actively managed ETF using a quantitative model to identify high-performing stocks.
• Focuses on five key sectors of the U.S. economy.
• Strong historical performance and outperformance compared to its benchmark.
• Relatively low trading costs and good liquidity.

Risks:

• Market risk: FV's performance is directly linked to the performance of the underlying stocks it holds, which can be volatile.
• Management risk: The success of FV relies heavily on the effectiveness of the Dorsey Wright model.
• Active management risk: Actively managed ETFs can have higher expense ratios than passively managed index-tracking ETFs.

Who Should Consider Investing:

FV is suitable for investors seeking:

• Active management: Investors who prefer an actively managed approach with the potential to outperform the market.
• Exposure to strong-performing stocks: Investors looking to invest in stocks with identified positive momentum and relative strength.
• Long-term capital appreciation: Investors seeking long-term growth potential through capital appreciation of the underlying stocks.

Fundamental Rating Based on AI:

8.5 out of 10

FV's strong historical performance, competitive moat through its unique investment strategy, and experienced management team contribute to a positive fundamental outlook. However, the small market share, active management risk, and higher expense ratio compared to some competitors warrant a slightly lower rating.

Resources and Disclaimers:

• First Trust Dorsey Wright Focus 5 ETF website: https://www.ftportfolios.com/ftportfolios-content/dam/first-trust/documents/etfs/fv-fund-overview.pdf
• Morningstar FV Profile: https://www.morningstar.com/etfs/arcx/fv/performance
• Disclaimer: This information is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.