First Trust Advisors LP launched three more smart beta ETFs with a focus on the momentum theme as a way to potentially enhance the returns of traditionally conservative equity factor plays.
First Trust rolled out the First Trust Dorsey Wright Momentum & Dividend ETF (Nasdaq: DDIV), First Trust Dorsey Wright Momentum & Value ETF (Nasdaq: DVLU) and First Trust Dorsey Wright Momentum & Low Volatility ETF (Nasdaq: DVOL), which each have a 0.60% expense ratio.
The three new ETFs try to reflect the performance of Dorsey Wright Momentum Plus Indexes, or rules-based equity indices that select securities based on individual stock momentum using Dorsey, Wright & Associates’ (DWA) proprietary relative strength methodology, along with another fundamental factor – value, dividend yield or volatility.
DDIV’s underlying index uses each security’s dividend yield to assign weights where securities with higher dividend yields are assigned correspondingly higher weights.
DVLU’s underlying index ranks companies on four “value” metrics, including price-to-sales ratio, price-to-book ratio, price-to-earnings ratio and price-to-cash flow ratio. Securities with higher value scores are assigned correspondingly higher weights.