This week saw two model changes. The First Trust Fixed Income Model sold FIXD and bought HYLS. The First Trust Sector Model bought FTXR.

This week saw changes to two of the First Trust ETF models on the Nasdaq Dorsey Wright research platform. The first change we will cover came in the First Trust Fixed Income Model, which sold the First Trust TCW Opportunistic Fixed Income ETF FIXD as it fell sufficiently out of favor in the model’s relative strength matrix ranking. The model purchased the First Trust Tactical High Yield ETF HYLS as it was the next highest-ranked fund that the model did not already own. This leaves the model with a heavy overweight toward more risk-on areas of fixed income, a transition we have seen across most fixed income relative rankings across the NDW platform. HYLS joins preferreds (FPE), convertible securities (FCVT), and emerging market bonds (FEMB) as the model holdings.

The other model change that occurred this week came as the First Trust Sector Model purchased the First Trust Nasdaq Transportation ETF FTXR. As a refresher, this model compares each of the funds in its inventory against the S&P 500 Index SPX, with those funds that demonstrate positive relative strength against the benchmark being included as model holdings. FTXR has shown significant improvement over the past several weeks, moving to a buy signal in mid-June at $20.50 before continuing higher to most recently reach $23.50, just three boxes shy of its 52-week high. The fund joins 10 other sector representatives as the current model holding, which are depicted below with their respective weightings.

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: 

* - 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         .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 International Focus Five Model is Wednesday         .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)