There is a change to the First Trust Income Model (FTINCOME) this week.

This week FTINCOME has its fourth change in just over two months as the model is selling the First Trust Dorsey Wright Momentum & Dividend ETF (DDIV) after falling below the sell threshold within the model’s relative strength matrix. In its place, the Income Model is adding the First Trust Morningstar Dividend Leaders Fund (FDL), which is the highest-ranking fund with the model matrix not already owned.

On the default point and figure trend chart, FDL has maintained a positive trend since January 2024, and returned to a buy signal during the latter part of April before rallying to the middle of the 10-week trading band at $41.50. The fund has maintained positive near-term relative strength against the market as defined by the S&P 500 Equal Weight Index (SPXEWI) since early March this year, helping the ETF register an acceptable fund score of 3.11. Year-to-date, FDL is up 2.9% and outperforming SPX by more than 2%, while maintaining a current yield north of 4%.

With the change, the First Trust Income Model will rebalance the five holdings to equally weighted at 20%. Along with maintaining exposure to the Dividend Achievers fund (FDL), the Model now maintains exposure to Energy Infrastructure (EMLP), International Dividend Aristocrats (FID), European Dividend stocks (FDD), and Utilities (FXU).

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 is a change to the First Trust Income Model (FTINCOME) this week; sell DDIV, buy FDL.

* - 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, May 21st, 2025. 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, May 21st, 2025. 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, June 4th, 2025. 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)