DVOL’s underlying index utilizes the inverse of each security’s one-year trailing volatility to assign weights where securities exhibiting lower volatility are assigned correspondingly higher weights.

“In our view, the First Trust Dorsey Wright Momentum Plus ETFs are effective tools for investment advisors looking to target exposure to a combination of relative strength—or momentum—with other well-known fundamental factors, including value, dividend yield, and low volatility,” Ryan Issakainen, Senior Vice President, Exchange-Traded Fund Strategist at First Trust, said in a note.

Relative strength tries to measure a security’s price momentum relative to its peers. By combining relative strength with a factor-based investing strategy, DWA argued that they may hone in on a desirable characteristic of a stock, such as value, low volatility or dividends, and combine it with the potential for more attractive excess returns, through the momentum tilt. Consequently, investors can potentially gain exposure to a combined strategy that performs better than the individual strategies may achieve separately from one another.

“Dorsey Wright’s research on relative strength is widely followed and we are pleased to offer these funds which incorporate their insights,” Issakainen added.

For more information on new fund products, visit our new ETFs category.