First Trust Focus Five Model (FTRUST5)

This week’s change to the Focus Five Model involves the removal of the First Trust Nasdaq-100 Technology Sector Index Fund (QTEC) due to the fund falling below the sell threshold within the Model’s relative strength matrix rankings. In its place, the First Trust Nasdaq Oil & Gas ETF (FTXN) is being added, as it is the highest ranked fund not already owned within the model’s matrix.

FTXN has maintained a positive trend and a buy signal on its default point and figure trend chart since July this year. Action in August brought about a second buy signal as the fund moved to new all-time chart high at $41.50 earlier in September. Along with superior near-term relative strength since late-July, the market RS chart returned to a buy signal during last week’s trading, favoring the Oil & Gas fund in the long-term as well. The positive overall technical picture for ETF boosts the fund score up to 5.58 (out of 6), outscoring its peers within the Energy (3.96) group on the Asset Class Group Scores.

With the change, the model will rebalance the five holdings to equally weighted at 20% and will now maintain exposure to the transportation (FTXR), biotechnology (FBT), technology (FXL), pharmaceuticals (FTXH), and oil & gas (FTXN).

Year-to-date, the Focus Five model has gained 16.88%, outperforming the S&P 500 Index (SPX) by more than 3% (thru 9/22).

First Trust Fixed Income (Total Return) Model (FTFIXINC.TR)

The change to the Fixed Income model this month involves the removal of the First Trust SSI Strategic Convertibles Securities ETF (FCVT.TR) as it fell below the sell threshold within the model’s relative strength matrix. In its place, the model is adding the First Trust Tactical High Yield ETF (HYLS.TR) which is the highest-ranking ETF in the matrix not already owned. With the change, the model will rebalance the four holdings equally to 25% and will maintain exposure to Preferreds (FPE.TR), Emerging Markets (FEMB.TR), Senior Loans (FTSL.TR), and High Yield (HYLS.TR). With the removal of convertibles funds, the weighted average yield among the ETFs within the model has increased to 6.3%. Year-to-date, the First Trust Fixed Income Model has gained 5.40%, outperforming its benchmark AGG.TR by more than 6% (through 9/22).

This weekly overview is designed to be used as a "radar" screen to bring your attention to potentially important technical changes that may require your attention and potential action. When evaluating the Fund Score, the strongest issues have scores of 4 or higher while those ETFs with scores below a 3 are no longer considered solid citizens.

The ETFs with the most relative strength buy signals (suggesting outperformance) versus the others in the group are listed at the top. These ETFs should be overweighted in the portfolio. Those ETFs with the least amount of relative strength buy signals versus the others in the group are listed at the bottom. These ETFs should be underweighted in the portfolio.

The First Trust ETF Portfolios are designed to identify major sector themes in the market place through the use of the Point & Figure relative strength tools. For more information on the portfolio construction and back testing, see the model info file on the models page.  To enter a portfolio amount and see shares to be purchased as well as modify the portfolio to your specifications, click here. (Note: The First Trust ETF Portfolios will be updated Wednesday mornings by 9:30 am EST) 

Weekly Changes:  There are changes to two First Trust models this week; the First Trust Focus Five (FTRUST5) and First Trust Fixed Income (Total Return).

* - Dates prior to 1/9/2008, which is when the First Trust Sector ETF Model Portfolio became available in the First Trust Weekly ETF Report, are representative of when the position was added to the backtested model.

* - The next evaluation date for the Focus Five Model is Wednesday, October 7th, 2026. Dates prior to 10/20/2009, which is when the First Trust Focus Five ETF Model Portfolio became available in the First Trust Weekly ETF Report, are representative of when the position was added to the backtested model.

* - The next evaluation date for the Thematic Focus Five Model is Wednesday, October 7th, 2026. Dates prior to 9/13/2023, which is when the First Trust Thematic Focus Five ETF Model Portfolio became available in the First Trust Weekly ETF Report, are representative of when the position was added to the backtested model.

* - The next evaluation date for the International Focus Five Model is Wednesday, September 30th, 2026. Dates prior to 2/22/2012, which is when the First Trust International Focus Five ETF Model Portfolio became available in the First Trust Weekly ETF Report, are representative of when the position was added to the backtested model.

Am I better off owning the managed mutual fund or the unmanaged ETF? The table below will help you answer that question. For each of the nine major asset classes and sectors, see the Top 20 mutual funds in NAV compared to the First Trust Universe of ETFs. The results are ordered by Fund Score, from highest to lowest. The Fund Score is a snapshot of the overall health of the fund based upon relative strength versus the broad market, relative strength versus its peers, and other trend measures. Those ETFs and Funds with a score above 3 are considered solid citizens with those having scores of 4 and above ideal candidates for purchase. Those ETFs and Funds with a score below 3 should be examined closer from a technical basis as they are not holding their ground versus the market and their peer group.
 

(Click any link above to see the Fund Score of the First Trust ETFs and the funds with the largest Net Assets in that category)