2 New First Trust ETFs Hit $1 Billion In Assets

Those that follow the ETF industry are keenly aware of the funds that are attracting assets as a result of their unique value proposition, low cost or enhanced distribution channels.

One company that continues to show significant growth through these methods is First Trust Portfolios L.P., which is known for their expanding suite of fundamental and tactical ETFs.

This year, its most successful launches include the First Trust Dorsey Wright Focus 5 ETF FV and First Trust Enhanced Short Maturity ETF FTSM. These ETFs have amassed $1.03 and $1.66 billion in assets, respectively, since their 2014 debut. 

The ETFs now join an elite group of ETFs that have been able to amass more than $1 billion in such a short period of time.

To put that in perspective, the third-highest asset total for a new ETF this year is $266 million in the iShares Currency Hedged Japan ETF HEWJ.

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While these high demand ETFs share a common brand, their individual investment mandates are at opposite ends of the risk spectrum.

FV is based on a strategy developed by Dorsey, Wright & Associates that identifies the five top-performing sectors in the domestic ETF universe.

This "fund of funds" methodology uses a relative strength ranking system to select underlying ETFs based on recent price momentum relative to other sectors. 

One of the unique aspects of this ETF is that the relative strength analysis is conducted on a weekly basis. Therefore, when a particular sector falls out of favor, it is quickly replaced by a fund showing better relative performance.

This keeps the underlying holdings fresh and equal-weighted within the index.

The current sectors within FV include: biotechnology, healthcare, Internet, consumer staples and consumer discretionary ETFs.

FTSM, on the other hand, is an actively-managed short-duration bond ETF designed to maximize capital preservation and daily liquidity. The fund primarily invests in investment grade corporate and government bonds along with money market securities. 

FTSM seeks to have a high degree of stability and modest income for its shareholders and charges a net expense ratio of 0.25 percent.

A fund of this nature is generally used as a short-term placeholder during periods of uncertainty or before deploying to more attractive opportunities.