Focus 5 ETF Gets A Dynamic Counterpart
The First Trust Dorsey Wright Focus 5 ETF (First Trust Exchange Traded Fund VI (NASDAQ: FV)), one of the stars of 2014's crop of rookie exchange-traded funds, now has a dynamic counterpart with last week's launch of the First Trust Dorsey Wright Dynamic Focus 5 ETF (NASDAQ: FVC).
Like FV, the First Trust Dorsey Wright Dynamic Focus 5 ETF holds, in order, the First Trust Consumer Disry Alpha Fnd (ETF) (NYSE: FXD), First Trust DJ Internet Index Fund (ETF) (NYSE: FDN), First Trust Cnsumer Stapl Alpha Fd (ETF) (NYSE: FXG), First Trust Utilities AlphaDEX Fnd (ETF) (NYSE: FXU) and the First Trust Health Care AlphaDEX Fd(ETF) (NYSE: FXH).
The Differences Between FV And FVC
While those ETFs represent all of FV's lineup, they combine for about 60 percent of the new FVC. The rest of FVC's lineup is allocated to short-term U.S. T-bills.
The relative strength analysis for FVC's equity ETFs is conducted on a bi-monthly basis as is the analysis for the ETF's cash holdings, according to Illinois-based First Trust.
Though FV is considered a passively managed ETF, relative strength analysis of its constituent ETFs is conducted weekly, meaning if one (or more) of the holdings tumble enough, they can be removed from FV and replaced with other First Trust sector and industry funds displaying better relative strength traits.
FV's ability to change holdings was on display earlier this year when it dumped the First Trust NYSE Arca Biotchnlgy Indx Fd (NYSE: FBT) in favor of FXU. However, that move left many FV investors what took so long as FV endured a massive slide in biotech stocks before parting ways to with FBT.
FVC has its work cut out for it when it comes to competing with FV, which has over $3.4 billion in assets under management. However, the new FVC is slightly less expensive than FV, as the former charges 0.79 percent per year, or $79 for each $10,000 invested, compared with FV's annual expense ratio of 0.89 percent.
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