First Trust Thematic Focus Five Model (Total Return)

There is a change to the First Trust Thematic Focus Five Model (Total Return) (FTTHEME5.TR) this week as it removes the First Trust Indxx Innovative Transaction & Process ETF (LEGR.TR) as it fell below the sell threshold within the Model’s total return relative strength matrix. In its place, the model is adding the First Trust Nasdaq Cybersecurity ETF (CIBR.TR). On both the default price return and the total return chart, CIBR has maintained a positive trend and buy signal since April and rallied to chart highs early last week before pulling back. CIBR maintains a 4.49 fund score, which is higher than the average score for the technology group on the Asset Class Group Scores page.

With the change, the model will rebalance the five holdings to equally weighted at 20% and now has exposure to Clean Energy (QCLN.TR), NextG (communications) (NXTG.TR), Smart Grid Infrastructure (GRID.TR), Future Vehicles & Technology (CARZ.TR), and Cybersecurity (CIBR.TR).

First Trust Sector Model

There is a change to the First Trust Sector Model (FTRUST) this week as the model is adding the First Trust Technology AlphaDEX Fund (FXL).  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 last week’s (5/29) action, FXL reversed into Xs after having been in a column of Os since early 2022. On the trend chart, FXL has maintained a positive trend and buy signal since April this year. Last week’s action led to a new all-time chart high at $220 before seeing Tuesday’s (6/9) action seeing the fund pull back from those highs. The ETF maintains a fund score of 5.71 (out of 6), which 1.5 points higher than the average score for a fund within the Technology group on the Asset Class Group Scores page.

With the change the model will rebalance with nine holdings equally weighted at 11.11% and now maintain exposure to materials (FXZ), banks (FTXO), pharmaceuticals (FTXH), biotechnology (FBT), semiconductors (FTXL), wind energy (FAN), green energy (QCLN), Nasdaq-100 tech (QTEC), and technology (FXL).

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 Thematic Focus Five Model (Total Return) (FTTHEME5.TR) and the First Trust Sector Model (FTRUST).

* - 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, June 24th, 2026. 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, June 24th, 2026. 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 17th, 2026. 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)