WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“First Trust”) expects to launch a new exchange-traded fund (“ETF”), the First Trust Dorsey Wright Dynamic Focus 5 ETF (Nasdaq: FVC), on March 18, 2016. The fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an index called the Dorsey Wright Dynamic Focus Five Index (the “index”).
The index is owned and was developed by Dorsey, Wright & Associates (“DWA”). DWA is a 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.
The index is designed to provide targeted exposure to five First Trust sector and industry based ETFs as identified by DWA’s proprietary relative strength methodology. This methodology is a ranking system used to measure a security’s price momentum relative to its peers and helps DWA identify meaningful patterns in daily share price movements. If an ETF’s price consistently rises faster than its peers, the index relies on DWA’s belief that the trend could continue. Additionally, the index has the potential to allocate to 1- to 3-month U.S. Treasury bills represented by the Nasdaq US T-Bill Index (the “cash index”). The index allocates to the cash index when the relative strength of more than one-third of the universe of First Trust ETFs begins to diminish relative to the cash index. The index seeks to identify major themes in the market, have exposure to those sectors whose price action is superior to others in the universe, and eliminate exposure to those sectors whose price action is sub-par to others in the universe. In instances where relative strength diminishes across equity sectors, the index gains varying amounts of exposure to the cash index.
“The First Trust Dorsey Wright Dynamic Focus 5 ETF provides a simplified way for financial advisors and their clients to gain exposure to a sector rotation strategy with the ability to allocate to cash equivalents. Dorsey Wright’s research on relative strength is widely followed and we are pleased to offer this fund which tracks an index that combines their insights with First Trust’s lineup of sector and industry ETFs,” said Ryan Issakainen, CFA, Senior Vice President, Exchange-Traded Fund Strategist at First Trust.
For more information about First Trust, please contact Ryan Issakainen of First Trust at (630) 765-8689 or RIssakainen@FTAdvisors.com.
About First Trust
First Trust Advisors L.P., along with its affiliate First Trust Portfolios L.P., are privately held companies which provide a variety of investment services, including asset management and financial advisory services, with collective assets under management or supervision of approximately $90.63 billion as of February 29, 2016 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts. First Trust is based in Wheaton, Illinois. For more information, visit http://www.ftportfolios.com.
You should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing. Contact First Trust Portfolios L.P. at 1-800-621-1675 to obtain a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.
The fund lists and principally trades its shares on The Nasdaq Stock Market LLC.
The fund’s return may not match the return of the Dorsey Wright Dynamic Focus Five Index. The ETFs held by the fund will generally not be bought or sold in response to market fluctuations.
Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share’s net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units.
The fund’s shares will change in value, and you could lose money by investing in the fund. One of the principal risks of investing in the fund is market risk. Market risk is the risk that a particular ETF owned by the fund, fund shares or stocks in general may fall in value. There can be no assurance that the fund’s investment objective will be achieved.
The ETFs in which the fund invests invest in equity securities and the value of the fund’s shares will fluctuate with changes in the value of these equity securities.
The ETFs in which the fund invests are likely to be concentrated in a single industry or sector. An ETF concentrated in a single industry or sector presents more risks than a fund that is broadly diversified over several industries or sectors.
The ETFs in which the fund invests may invest in small capitalization and mid capitalization companies. Such companies may experience greater price volatility than larger, more established companies.
The fund may be subject to interest rate risk and income risk. Interest rate risk is the risk that the value of the cash equivalents in the fund will decline because of rising market interest rates. Income risk is the risk that income from the fund's portfolio could decline if interest rates fall.
The ETFs in which the fund invests may invest in securities of non-U.S. issuers which are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers. These risks may be heightened for securities of companies located in, or with significant operations in, emerging market countries. The ETFs in which the fund invests may invest in depositary receipts which may be less liquid than the underlying shares in their primary trading market.
The index employs a “momentum” style methodology that emphasizes selecting ETFs that have had higher recent price performance compared to other ETFs. Momentum can turn quickly and cause significant variation from other types of investments.
Pursuant to the methodology that the index employs, the fund may own a significant portion of the First Trust ETFs included in the index. Any such ETF may be removed from the index in the event that it does not comply with the eligibility requirements of the index. As a result, the fund may be forced to sell shares of certain First Trust ETFs at inopportune times or for prices other than at current market values or may elect not to sell such shares on the day that they are removed from the index, due to market conditions or otherwise.
The fund may invest in U.S. government obligations. U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. government. Securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government.
The risks of owning an ETF generally reflect the risks of owning the underlying securities, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that increase their costs.
The fund invests in securities of affiliated ETFs, which involves additional expenses that would not be present in a direct investment in such affiliated ETFs.
The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time.
The fund is classified as “non-diversified” and may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.
First Trust Advisors L.P. is the adviser to the fund. First Trust Advisors L.P. is an affiliate of First Trust Portfolios L.P., the fund’s distributor.
The fund is not sponsored, endorsed, sold or promoted by Dorsey Wright. Dorsey Wright makes no representation or warranty, express or implied, to the owners of the fund or any member of the public regarding the advisability of trading in the fund. Dorsey Wright’s only relationship to First Trust is the licensing of certain trademarks and trade names of Dorsey Wright and of the index, which is determined, composed and calculated by Dorsey Wright without regard to First Trust or the fund.