And just like that, the first quarter of 2021 is in the books. With that said, we wanted to take this time to review the performance and activity of the First Trust ETF Models over the last quarter.

First Trust Focus 5 Model FTRUST5: The equity market finished the first quarter on a positive note with the S&P 500 SPX rallying nearly 6% while the First Trust Focus 5 Model was up nearly 10% for the quarter. 

We have seen some notable rotation occurring among the sector rankings recently, which has caused some changes to the Focus 5 Model this year.  Earlier in the year (January) we sold some of the tech/growth exposure.  The Internet ETF (FDN), which is primarily a blend of Tech and Communication Services was removed and replaced with Industrials (FXR).  That is the first time FDN was not a holding since the model launched in 2009!  It was also more evidence of Value coming back over Growth as Industrials is more value-oriented.  With that said, we still hold some Technology, but that exposure has come down to a neutral weight relative to the broader equity market.

The performance of the Focus 5 Model in Q1 was led by Transportation FTXR which was up over 17%.  Consumer Discretionary FXD and Industrials FXR had strong quarters with gains of 14% and 13%, respectively. 

First Trust Sector Model FTRUST: The First Trust Sector Model put together another strong quarter in Q1 with a return of more than 15%, bringing the trailing one year performance to 109.7% which compares favorably to the 54% trailing one year return for the S&P 500. 

There were a few changes that happened in the first quarter including the addition of Financials FXO and Industrials FXR.  Additionally, a couple of alternative energy names were removed including Wind Energy FAN and Clean Energy QCLN.

Energy and Financials actually led the performers within the Sector Model in Q1 with the First Trust Natural Gas ETF FCG up 45% in the quarter followed by Oil & Gas FTXN, which was up 34%.  Banks FTXO, Energy FXN, and Community Banks QABA were all up more than 25% in the quarter.

First Trust Size & Style Model FTSIZESTYLE: The First Trust Size & Style Model FTSIZESTYLE  had a strong first quarter with a return of 9.86%.  There was a big theme of rotation out of growth as both Large Cap Growth FTC and Mid Cap Growth FNY were removed from the model, those positions were replaced with Small Cap Core FYX and Small Cap Value FYT.  As a result, the Model now has 100% Small Cap exposure with the third position being Small Cap Growth FYC.

First Trust International Focus 5 Model FTRUSTINTL: The First Trust International Model FTRUSTINTL was up nearly 4% in the first quarter compared to a return of 4.6% for the MSCI ACWI ex-US ETF CWI.  There were no changes to the holdings of the model in the first quarter, and over the trailing 12 months the International Model is up 66% versus 47% for the benchmark. 

The Model maintains exposure to China through the Chindia ETF FNI, which is split roughly 50/50 between China and India, as well as BICK, which is a combination of Brazil, India, China, and Korea.  With the addition of FEP in December, the International Model enters Q2 2021 with an overweight towards Developed Markets as Germany FGM and Switzerland FSZ are also holdings in the model.

First Trust Income Model FTINCOME: The First Trust Income Model FTINCOME had a strong first quarter of performance relative to the S&P 500 SPX with a return of more than 13%.  There were no changes to the Model holdings in the first quarter.

The performance of the Model was led by the First Trust Dorsey Wright Momentum & Dividend ETF DDIV which was up nearly 18% in Q1 followed by Large Cap Value FTA, which was up nearly 16%.  In addition to DDIV and FTA, other members of the Model include the First Trust STOXX European Select Dividend ETF FDD, Technology Dividend TDIV, and Rising Dividend Achievers RDVY.

First Trust Fixed Income Model FTFIXINC.TR: With the rising interest rate environment in Q1, the bond market generally pulled back as the Core US Bond Market ETF AGG was down a little over 3%.  The First Trust Fixed Income Model pulled back, a bit, as well, but fared better with a return of -0.9% in Q1.  There was one change that took place in the Model holdings, and that was removing Convertibles FCVT late in the quarter and adding Senior Loans FTSL.  In addition to FTSL the Fixed Income Model holds High Yield HYLS, Emerging Market Bonds FMB, and Preferreds FPE. 

Unless otherwise stated (or denoted by “.TR”) performance returns for equities, ETFs, and indexes do not reflect dividends and are based on the last sale for the date requested. Returns do not reflect all potential transaction costs. Past performance is not indicative of future results. Potential for profits is accompanied by the possibility of loss.