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.
“Funds that buy momentum stocks had their best month in more than a year in October. The strategies advanced 4.9 percent, the most since June 2016, leaving hedge funds that follow other automated strategies in the dust. As this year’s best performing sector, technology contains a large amount of momentum stocks,” according to Bloomberg.
FV debuted in March 2014 with an original roster of the First Trust NYSE Arca Biotechnology Index Fund (NYSEArca: FBT), First Trust Consumer Staples AlphaDEX Fund (NYSEArca: FXG), First Trust Health Care AlphaDEX Fund (NYSEArca: FXH), First Trust Consumer Discretionary AlphaDEX Fund (NYSEArca: FXD) and FDN.
Today, FDN is the only original holding remaining in FV, but FV’s overall technology exposure of about 60% is as high as it has been in FV’s lifetime.
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