DVOL Profile
The First Trust Dorsey Wright Momentum & Low Volatility ETF is designed to provide investors with exposure to a unique blend of equity securities that combine low volatility with high momentum characteristics. Under normal market conditions, the fund commits at least 90% of its net assets, including any investment borrowings, to the securities that comprise its underlying index. This strategic allocation ensures that the majority of the fund’s assets are invested in the specific stocks selected by the index’s criteria.
The underlying index, known as the Dorsey Wright Momentum & Low Volatility Index, utilizes a rules-based methodology to identify and track the 50 stocks within the NASDAQ US Large Mid Cap Index that demonstrate the lowest levels of price volatility while maintaining high momentum indicators. The index is carefully constructed to balance stability and performance, targeting companies that offer a combination of reduced risk and strong positive momentum. This approach aims to capture stocks with stable performance characteristics that are also exhibiting favorable trends.
By focusing on low volatility stocks with strong momentum, the fund seeks to provide a smoother investment experience with potentially enhanced returns. The low volatility aspect helps to mitigate the risk of large fluctuations in stock prices, while the momentum factor aims to capture positive price trends. This dual focus is designed to offer investors a way to gain exposure to equities with lower risk profiles while still benefiting from upward price movements.
The First Trust Dorsey Wright Momentum & Low Volatility ETF is particularly suited for investors looking to balance stability with growth potential. Its investment strategy is intended to reduce overall portfolio volatility while still pursuing performance through momentum-driven stocks. The fund’s methodology aims to achieve a favorable risk-return profile, appealing to those who seek a more stable investment approach within the large and mid-cap segments of the U.S. equity market.
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