First Trust Dorsey Wright Momentum & Value ETF

DVLU

Market cap $47M

While the markets are generally fixated on what the Magnificent Seven is doing in terms of first-quarter earnings, there are other names investors may want to track. This morning's earnings bonanza was highlighted by names like Coca-Cola (KO), BP p.lc.

First Trust Dorsey Wright Momentum & Value ETF selects 50 large/mid-cap stocks based on four value metrics after first passing a proprietary momentum screen. Its expense ratio is 0.60% and the ETF has $29 million in AUM. I found the Dorsey Wright approach to momentum investing to be unconvincing. Furthermore, an ETF applying the strategy has performed poorly over the last 18 years. DVLU's selection process also does not include any sector constraints, leading to 55% allocated to a single sector. This lack of guardrails will likely to lead to inconsistent returns.

US equities, as measured by the S&P 500 Index, have performed strongly so far in 2023.