HUSV Profile
The First Trust Horizon Managed Volatility Domestic ETF aims to provide capital appreciation by focusing on U.S. companies that are expected to exhibit lower future volatility. Managed by a sub-advisor with expertise in volatility forecasting, the fund allocates at least 80% of its net assets to common stocks of domestic companies listed on major U.S. exchanges. The selection process targets stocks anticipated to have lower price fluctuations compared to the broader market, aligning with the fund's objective of reducing risk while pursuing returns.
The fund's investment strategy leverages advanced volatility forecasting models developed by the sub-advisor. These models are designed to predict future volatility based on historical data, market trends, and other relevant factors. The strategy is predominantly quantitative, relying on systematic, rules-based criteria to select securities. However, the sub-advisor retains the discretion to adjust the parameters and make active management decisions to refine the fund's exposure and enhance its risk-return profile.
In practice, the fund’s approach involves analyzing and selecting stocks from a broad universe of U.S. equities. By focusing on companies with lower expected volatility, the fund seeks to mitigate the impact of market swings and provide more stable performance. The active management component allows for adjustments based on market conditions, aiming to optimize the fund's volatility profile and achieve its investment goals.
The First Trust Horizon Managed Volatility Domestic ETF represents a strategic blend of quantitative analysis and active management. It offers investors a pathway to potentially lower risk exposure in the domestic equity market by targeting companies with stable performance characteristics. This approach is designed to appeal to investors seeking to balance growth potential with reduced volatility, leveraging sophisticated forecasting techniques and expert oversight to manage and mitigate market risk.
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