Five months after the successful launch of the Dorsey Wright Focus 5 ETF (FV), First Trust launched an international version, the First Trust Dorsey Wright International ETF (IFV). This new ETF offers exposure to international equity markets to a broad spectrum of investors. Below we take an inside look at the strategy behind IFV, which began trading on NASDAQ on July 23, 2014.
What is the name of the new ETF?
First Trust Dorsey Wright International Focus 5 ETF (IFV)
What is the strategy behind IFV?
The Dorsey Wright International Focus Five Index is designed to provide targeted exposure to five First Trust international ETFs identified by Dorsey, Wright & Associates index methodology. This strategy utilizes relative strength measurements to identify which ETFs may offer the greatest potential to outperform the other ETFs in the selection universe, which includes international country/region-based ETFs advised by First Trust Advisors L.P.
Why did you choose this particular index? What about the methodology makes this interesting to the broader investment community?
We chose this index because we believe in providing high quality investment products that meet the needs of our clients. As we consulted with financial advisors across the country, we determined that a one-ticket solution, which offers efficient access to Dorsey Wright & Associates' relative strength methodology, is a compelling way to provide exposure to international equity markets. This index methodology relies on unemotional, objective data in seeking to identify the strongest trends within the First Trust international equity ETF universe while seeking to avoid the weakest ones. Due to the success of our recently launched First Trust Dorsey Wright Focus 5 ETF (FV), we felt that an International version was the logical next step in providing valuable investment products to the market place and further our partnership with Dorsey Wright & Associates.
How does this ETF differ from other ETFs?
This ETF is unique due to its focus on momentum within international equity markets, and also the fact that it packages five First Trust international ETFs in a single product, using Dorsey Wright & Associates well-known proprietary methodology. IFV allows an investor access to access a unique, research-driven model through a tax-efficient, tradable investment vehicle. Moreover, IFV’s index methodology will likely result in a more dynamic asset allocation among international equity markets than traditional broad international equity index ETFs.
What is your investment approach in managing IFV?
The Fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of the Dorsey Wright International Focus Five Index. In managing IFV, The Fund seeks to replicate the holdings and weightings of the Dorsey Wright International Focus 5 Index that generates a 95% performance result correlation.
Who are you targeting as potential clients?
First Trust intends to market IFV to the entirety of our existing client base, which includes both retail and institutional investors. First Trust also intends to market IFV to financial advisors throughout the country that know and follow Dorsey Wright & Associates research, as IFV is a convenient and efficient way to gain access to DWA’s proprietary relative strength ranking system within international equity markets.
How can IFV be used in an investor’s portfolio?
IFV may be appropriate for those investors seeking exposure to momentum-style investing within the international equity markets. IFV may be used as a supplement to an investor’s core international equity exposure.
What’s most important for an asset manager or individual investor to know about IFV?
IFV combines the strengths and benefits of First Trust International Equity ETFs with Dorsey Wright & Associates’ proprietary relative strength methodology. Together, they form the inputs for a truly unique and valuable product for the appropriate investor base.
More information about the First Trust Dorsey Wright International ETF (IFV)