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Posted by
Two Blokes May 17 -
Filed in
Stock
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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.
