First Trust, DWA roll out international “Focus Five” ETF

Jul 26th, 2014 | By | Category: Equities

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First Trust, a leading provider of exchange-traded funds, has teamed up once again with relative strength experts Dorsey Wright & Associates (DWA), this time to launch an international equity ETF.

First Trust, DWA roll out international “Focus Five” ETF

Tom Dorsey, President & CEO of Dorsey, Wright & Associates.

Listed on Nasdaq, the First Trust Dorsey Wright International Focus 5 ETF (IFV) is based on a systematic momentum strategy index called the Dorsey Wright International Focus Five Index.

The Dorsey Wright International Focus Five Index is designed to provide targeted exposure to the five First Trust international equity ETFs identified by DWA’s relative strength methodology to offer the greatest potential to outperform the other ETFs in the selection universe, which includes country and region-based ETFs managed by First Trust.

Using the DWA relative strength ranking system, the ETFs are compared to each other to determine inclusion. Each ETF is given a score that allows DWA to objectively determine where it ranks relative to all other ETFs in the universe. The top five ranking ETFs are included in the index and the relative strength analysis is conducted on a weekly basis. ETFs are replaced when they fall sufficiently out of favour, based on their relative strength, versus the other ETFs within the universe.

The index is rebalanced periodically so each position is equally weighted upon rebalance. DWA believes the design of the index allows them to identify major themes in the market, have exposure to those countries or regions whose price action is superior to others in the universe and eliminate exposure to those countries or regions whose price action is sub-par relative to others in the universe.

As of launch, the fund had exposure to First Trust’s Switzerland, Canada, Germany, UK and emerging market small-cap ETFs.

DWA is an independent and privately owned registered investment advisory firm that provides professional management of equity portfolios for investors and investment research services for numerous broker/dealers and large institutions around the world. Technical analysis provides the cornerstone of their approach and relative strength plays a very important role. Relative strength is a ranking system used to measure a security’s price momentum relative to its peers.

Tom Dorsey, President & CEO of DWA, said: “International investing has always been a passion of mine. I am excited that we have collaborated with First Trust to bring a second ETF that captures the Dorsey Wright Focus Five methodology and now provides investors with a tactical international equity strategy.”

Dave LaValle, Head of ETP Listings at Nasdaq OMX, commented: “We are thrilled to expand our partnership with First Trust and welcome their new exchange-traded product to the Nasdaq marketplace. With this new product, we will build on the success of the domestic version of the First Trust Dorsey Wright Focus 5 ETF (FV) and we believe the international version will be well received by a broad spectrum of investors.”

The fund has total annual expenses of 1.10%. This includes acquired fund fees and expenses of 0.80%.

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