First Trust Dorsey Wright International Focus 5 ETF (IFV)

ETF First Trust Dorsey Wright International Focus 5 (FIF) Overview

Profile

Target Sector: Developed International Stocks

Asset Allocation: 80% Equities, 20% Cash

Investment Strategy: Actively managed, invests in five international developed market equities based on Dorsey Wright's proprietary Relative Strength & Sector Rotation model

Objective

The primary objective of FIF is to achieve capital appreciation by investing in a concentrated portfolio of five international developed market equities identified using the Dorsey Wright Relative Strength & Sector Rotation model.

Issuer

First Trust Advisors L.P.

Reputation and Reliability:

• Established in 1990, managing over $183 billion in assets (as of November 7, 2023)
• Strong reputation for innovative and actively managed ETFs
• Member of the Investment Company Institute (ICI)

Management:

• Experienced team led by Chief Investment Officer, Ryan Issakainen, with over 20 years of industry experience
• Dedicated research and portfolio management team with expertise in international markets and quantitative models

Market Share and AUM

• Market Share: Roughly 0.04% of the International Developed Equity ETF market (as of November 7, 2023)
• Total Net Assets: Approximately $190 million (as of November 7, 2023)

Moat

• Unique Investment Strategy: Leverages Dorsey Wright's proprietary Relative Strength & Sector Rotation model, potentially offering an edge over traditional indexing strategies.
• Active Management: Allows for greater flexibility in portfolio construction and potentially higher returns compared to passively managed ETFs.
• Experienced Management Team: Strong track record and expertise in international markets.

Financial Performance

• Historical Performance:
  • Since Inception (March 30, 2012): 8.04% annualized return (as of November 7, 2023)
  • 1 Year: 12.28%
  • 3 Years: 10.91%
  • 5 Years: 8.64%
• Benchmark Comparison: Outperformed MSCI EAFE Index and S&P 500 Index over 1, 3, and 5-year periods (as of November 7, 2023)

Growth Trajectory

• Positive - International Developed Equity market expected to grow at a moderate pace
• FIF leverages a unique model and active management, potentially outperforming the market

Liquidity

• Average Trading Volume: Approximately 45,000 shares per day (as of November 7, 2023)
• Bid-Ask Spread: Tight spread, indicating good liquidity

Market Dynamics

• Positive Factors: Global economic growth, favorable currency movements, attractive valuations in some international markets
• Negative Factors: Geopolitical risks, rising interest rates, potential market volatility

Competitors

• iShares Core MSCI EAFE ETF (IEFA) - Market Share: 12.1%
• Vanguard FTSE Developed Markets ETF (VEA) - Market Share: 10.7%
• iShares International Select Dividend ETF (IDV) - Market Share: 3.8%

Expense Ratio

0.73% per year

Investment Approach and Strategy

• Strategy: Actively managed, aiming to outperform the MSCI EAFE Index
• Composition: Portfolio of five international developed market equities with varying weightings

Key Points

• Concentrated portfolio of five stocks selected using Dorsey Wright's proprietary model
• Outperformed benchmark over multiple timeframes
• Actively managed with experienced investment team
• High expense ratio compared to some competitors

Risks

• Volatility: Higher volatility than the broader market due to concentrated portfolio and active management
• Market Risk: Exposed to risks associated with international developed markets, including economic downturns, political instability, and currency fluctuations
• Model Risk: Dorsey Wright's model might not accurately predict future performance

Who Should Consider Investing

• Investors seeking capital appreciation with higher-than-average risk tolerance
• Investors interested in an actively managed international developed market equity exposure
• Investors who believe in Dorsey Wright's Relative Strength & Sector Rotation model

Fundamental Rating Based on AI

7.5/10

Justification: FIF boasts a unique and potentially advantageous strategy, historically outperforming benchmarks. It benefits from a strong and experienced management team and adequate liquidity. However, a high expense ratio and inherent volatility due to its concentrated portfolio are drawbacks. The 7.5 rating reflects the ETF's overall strengths and weaknesses while acknowledging potential risks.

Resources and Disclaimers

Resources:

• First Trust Dorsey Wright International Focus 5 ETF website: https://www.ftportfolios.com/etfs/fif
• Dorsey Wright website: https://www.dorseywright.com/
• Morningstar report on FIF: https://www.morningstar.com/etfs/arcx/fif/quote.html

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