There is a change to the universe of the First Trust Focus Five Model, the underlying model strategy for the First Trust Dorsey Wright Focus Five ETF (FV). For more information visit ftportolios.com.

As part of evaluations of NDW models and strategies, the First Trust Focus Five Model (FTRUST5) is seeing the addition of the First Trust Indxx Aerospace & Defense ETF (MISL) to the model universe. The addition is intended to broaden the scope of potential trends available to the model, allowing the strategy to focus exposure on specific sector and subsector themes.

The First Trust Focus Five Model universe will now consist of 21 ETFs but will continue to seek exposure to the five strongest ETFs as defined within the model’s relative strength matrix. The sell threshold within the model’s matrix will remain the same as the addition of the one fund still keeps the sell threshold within our rules set of a matrix-based strategy. The model will continue to be evaluated on a bi-weekly basis, and changes to the model holdings will continue to rebalance to equally weighted positions at 20% in each fund.

The current five holdings within the Focus Five remain unchanged with the model universe update and are as follows: the First Trust Dow Jones Internet Index Fund (FDN), First Trust Financials AlphaDEX Fund (FXO), First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), First Trust Utilities AlphaDEX Fund (FXU), and First Trust Nasdaq Semiconductor ETF (FTXL). The next evaluation for the First Trust Focus Five Model is December 10^th, 2025, which will be the last evaluation for 2025.

The addition, MISL will bring the number of funds representing the industrials sector up to three with the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR) and First Trust Nasdaq Transportation ETF (FTXR) being the others. Industrials now joins technology and healthcare as sectors with three or more funds representing the broader sector in the model inventory. This adds a broad sector that can take the majority of the allocation within the five holding model. Note that any broad sector exposure will still be capped at a maximum allocation of 60% in the strategy.

The new addition to the model universe, MISL, seeks to maintain exposure to aerospace and defense companies that derive 50% of their revenue from business activities within advanced and traditional aerospace and defense. The fund is market cap weighted and holds 50 stocks while being rebalanced quarterly and reconstituted semi-annually.

From a technical perspective, MISL maintains a strong fund score of 5.40, which is higher than the average score for a fund within the broader consumer cyclical (3.22) and industrial (3.88) groups on the NDW Asset Class Group Scores page. The fund has positive near and long-term market relative strength (RS), and on its trend chart, MISL has maintained a positive trend since October 2022. The ETF rallied to an all-time high in early October before pulling back and returning to a sell signal to kick off November.

First Trust Fixed Income Model

There is a change to the First Trust Fixed Income Model (Total Return) (FTFIXINC.TR) this week. The change involves the removal of the First Trust SSI Strategic Convertible 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 Senior Loan Fund (FTSL.TR), which is the highest-ranking ETF in the matrix not already owned. This marks the sixth trade in the model in 2025 as it continues to adapt to trends within the Fixed Income space. While a holding within the model a short time, the Convertibles fund was able to gain over 16% on a total return basis, outperforming the Aggregate Bond fund (AGG.TR) by more than 10% (5/20/2025 to 11/25/2025). 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), High Yield (HYLS.TR), and Senior Loan (FTSL.TR). Additionally, the weighted average yield among the ETFs within the model will increase to 6%. Year-to-date, the First Trust Fixed Income Model has gained 10% and is outperforming its benchmark by 2.5% (thru 11/25).

First Trust Sector Model

There is a change to the First Trust Sector Model (FTRUST) with the addition of the First Trust NYSE Arca Biotechnology Index Fund (FBT). Recall the First Trust Sector Model utilizes an RS versus benchmark methodology, as opposed to an RS matrix of the model’s full ETF lineup. The First Trust Sector Model’s process compares each of the funds in the model’s universe to the S&P 500 Index (SPX) on a 6.5% scale RS chart. If the RS chart resides in a column of Xs, the ETF is included in the model’s holdings, while an RS chart residing in a column of Os warrants the fund’s exclusion. Following Friday’s (11/21) action, the RS chart comparing FBT to SPX reversed into a column of Xs after having been in Os since the latter part of 2023. FBT has a strong fund score of 5.72 with the fund maintaining positive market RS since October and a positive trend since June. After completing a fifth buy signal in early October shares have pushed to new all-time highs in November. With the addition of FBT, the First Trust Sector Model will rebalance with seven holdings to equally weighted at 14.29% and continues to maintain an overweight toward technology. 

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 the First Trust Fixed Income and Sector Models.

* - 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, December 10th, 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, December 10th, 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, December 3rd, 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)