There is a change to the universe of the First Trust Focus Five Model, along with changes to the holdings of the First Trust Fixed Income and Sector Models.
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 10th, 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.
