Over 160 exchange traded products have debuted this year and as is always the case with new ETFs, some of this year’s new funds have flailed while others have successful right away.
As of mid-October just over 10% of the new ETFs that had come to market to that point in 2014 had topped $75 million in assets under management. The First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV), which debuted in early March, long ago left $75 million in AUM in the dust.
In fact, FV is now a $1 billion fund, easily making it one of this year’s most successful new ETFs. This is how rapidly FV has grown: The ETF debuted in early March and by September, it had $500 million in AUM. By September 24, that number had swelled to $530 million. When we highlighted some of this year’s most successful new ETFs in mid-October, FV had $570 million in AUM. [Another Good Year for New ETFs]
Translation: FV has added $430 million, or about 43% of its current AUM total, in just five weeks. Doresy Wright’s indices that focus on relative strength and other technical factors serve as the benchmarks for scores of sector and specialized ETFs, many of which have delivered impressive out-performance of more plain vanilla competing products. FV has gained a rapid following because advisors were already familiar with the methodology backing the ETF prior to the fund’s launch. [A Fast-Growing Momentum ETF]
Initially, FV’s timing looked inauspicious. The ETF, rooted in momentum strategies and heavy with biotechnology and Internet exposure, came to market at a time when investors were fleeing those sectors. Still, FV has mustered a gain of about 9% since coming to market and hit an all-time high earlier Friday.
Due in large part to its biotech exposure, FV has recently been sharply outpacing the S&P 500. Over the past 90 days, FV is up 6.3% compared to a 3.7% gain for the benchmark U.S. index. A combined 44.5% weight to two health care ETFs – the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT) and the First Trust Health Care AlphaDEX Fund (NYSEArca: FXH) – has helped. FBT is this year’s top-performing sector ETF with a gain of over 43%. [A Look at the Dominance of Health Care ETFs]