The $3.5 billion First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV) has helped exchange traded fund investors target some high-flying sectors, but the momentum strategy recently cut its biotech position for a defensive play.

The First Trust Dorsey Wright Focus 5 ETF follows DWA’s relative strength ranking system where sector ETFs are compared to each other to measure price momentum relative to other ETFs in the universe and the top five ranking ETFs are included in the underlying index. The momentum strategy basically bets that hot movers will continue to rise, so investors would essentially be buying high and selling even higher. The relative strength analysis is conducted on a weekly basis.

Since its inception, FV has held about 20% of its portfolio in five smart-beta sector ETFs, including First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT), First Trust Dow Jones Internet Index Fund (NYSEArca: FDN), First Trust Consumer Staples AlphaDEX Fund (NYSEArca: FXG), First Trust Health Care AlphaDEX Fund (NYSEArca: FXH) and First Trust Consumer Discretionary AlphaDEX Fund (NYSEArca: FXD).

However, in a sign of the times, FV has cut its biotech FBT position and replaced it with the First Trust Utilities AlphaDEX Fund (NYSEArca: FXU).

The major shake-up has not gone unnoticed in the ETF industry. Looking at ETF asset flows, FXU added about $1 billion in new assets over the past week while FBT saw about $1 billion in net outflows, according to

When ETFs experience such large trades in a short period of time, the funds will typically experience heavy creation or redemption activity  as someone makes makes the trade. The large move, though, was very efficiently executed, writes Dave Nadig, Director of ETFs at FactSet.

“In short, the whole process worked like a well-conducted orchestra, with transparent and immediate impacts from the smallest-affected stocks to the largest parts of the block trade,” Nadig said. “The process of information-signaling worked just like it’s supposed to, and regardless of how First Trust negotiated the trade – either all at once, or as legs, or as in-kind transfers or any combination thereof – the reality is that over $700 million moved out of one set of stocks into another, all for about 10 basis points off VWAP.”

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.