First Trust, begun trading two new ETFs, the First Trust Horizon Managed Volatility Domestic ETF (NYSEArca: HUSV) and the First Trust Horizon Managed Volatility Developed International ETF (NYSEArca: HDMV) on Thursday, August 25, 2016.
Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: HUSV | Exchange: NYSE ARCA |
| Name: First Trust Horizon Managed Volatility Domestic ETF | Net Expense Ratio: 0.70% |
FUND OBJECTIVE:
The First Trust Horizon Managed Volatility Domestic ETF is an actively managed ETF. The Fund’s investment objective is to provide capital appreciation.
Under normal market conditions, the Fund will seek to achieve its investment objective by investing at least 80% of its net assets (including investment borrowings) in common stocks of domestic (US) companies listed and traded on U.S. national securities exchanges that Horizon Investments, LLC (Sub-Advisor) believes exhibit low future expected volatility.
The strategy is largely quantitative and rules-based, but also includes multiple parameters over which the Sub-Advisor may exercise discretion (including, but not limited to, the number of holdings and the weightings of particular holdings) in connection with its active management of the Fund. To begin, the Sub-Advisor gathers pricing and generates return data for the starting universe, which is comprised of common stocks of large cap domestic companies listed and traded on U.S. national securities exchanges. The Sub-Advisor then conducts volatility forecasts for securities comprising the starting universe and ranks them from low to high based on their volatility forecasts. The Sub-Advisor will target 50-75 securities for inclusion in the portfolio based on future expected volatility. Once the final portfolio is selected, the Sub-Advisor gives larger weights to securities with lower future expected volatility and has the ability to adjust how aggressive the weighting scheme is depending on market conditions. The Sub-Advisor will periodically rebalance and reallocate the portfolio using this methodology, which may result in higher levels of portfolio turnover.
Top Holdings (08/25/16):
| Johnson & Johnson | 4.25% |
| Waste Management, Inc. | 3.55% |
| Lockheed Martin Corporation | 3.35% |
| AT&T Inc. | 3.16% |
| 3M Company | 3.05% |
| United Parcel Service, Inc. (Class B) | 3.04% |
| The Procter & Gamble Company | 2.90% |
| Danaher Corporation | 2.55% |
| PepsiCo, Inc. | 2.51% |
| Republic Services, Inc. | 2.24% |
Top Sector Holdings (08/25/16):
| Consumer Staples | 21.91% |
| Industrials | 21.59% |
| Utilities | 15.95% |
| Financials | 13.69% |
| Health Care | 12.62% |
| Consumer Discretionary | 7.52% |
| Telecommunication Services | 4.70% |
| Energy | 1.09% |
| Information Technology | 0.93% |
Useful Links:
HUSV Home Page
2.
FUND INFORMATION:
| Symbol: HDMV | Exchange: NYSE ARCA |
| Name: First Trust Horizon Managed Volatility Developed International ETF | Net Expense Ratio: 0.80% |
FUND OBJECTIVE:
The First Trust Horizon Managed Volatility Developed International ETF is an actively managed ETF. The Fund’s investment objective is to provide capital appreciation. Under normal market conditions, the Fund will seek to achieve its investment objective by investing at least 80% of its net assets (including investment borrowings) in common stocks and depositary receipts of developed market companies listed and traded on non-U.S. exchanges that Horizon Investments, LLC (Sub-Advisor) believes exhibit low future expected volatility.
The term “developed market companies” means those companies:
(i) whose securities are traded principally on a stocke xchange in a developed market country,
(ii) with a primary business office in a developed market country, or
(iii) that have at least 50% of their assets in,or derive at least 50% of their revenues or profits from, a developed market country.
The Sub-Advisor considers Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States to be developed market countries. However,this list may change in response to market and geopolitical events. Under normal market conditions, the Fund will invest in at least 3 countries and at least 40% of its net assets in countries other than the United States. The Fund has significant investments in companies operating in Europe.
The goal of this strategy is to capture upside price movements in rising markets and reduce downside risk when markets decline.To implement this strategy,in selecting securities for the Fund from a portfolio of eligible securities,the Sub-Advisor employs volatility forecasting models to forecast future expected volatility.The strategy is largely quantitative and rules-based, but also includes multiple parameters over which the Sub-Advisor may exercise discretion (including, but not limited to,the number of holdings and the weightings of particular holdings)in connection with its active management of theFund. To begin,the Sub-Advisor gathers pricing and generates return data for the starting universe, which is comprised of common stocks and depositary receipts of large and mid-cap securities across developed markets, which securities have been pre-screened bythe Sub-Advisor to ensure they are liquid and accessible for trading. The Sub-Advisor then conducts volatility forecasts for securities comprising the starting universe and ranks them from low to high based on their volatility forecasts.The Sub-Advisor will target 100-200 securities for inclusion in the portfolio based on future expected volatility. Once the final portfolio is selected,the Sub-Advisor measures co-movements of the selected securities using statistical techniques designed to reduce estimation error. In the final portfolio construction,the Sub-Advisor gives larger weights to securities with lower future expected volatility and has the ability to adjust how aggressive the weighting scheme is depending on market conditions. TheSub-Advisor will periodically rebalance and reallocate the portfolio using this methodology, which may result in higher levels of portfolio turnover.
Top Holdings (08/25/16):
| Syngenta AG | 2.00% |
| MAN SE | 1.99% |
| CLP Holdings Limited | 1.94% |
| Swiss Prime Site AG | 1.91% |
| Nestle S.A. (Registered) | 1.85% |
| Novartis AG | 1.50% |
| Singapore Exchange Limited | 1.45% |
| Singapore Airlines Limited | 1.44% |
| Kuehne + Nagel International AG (Registered) | 1.26% |
| The Hong Kong and China Gas Company Limited | 1.24% |
Top Country Exposure (08/25/16):
| Switzerland | 16.65% |
| Hong Kong | 15.71% |
| Singapore | 11.50% |
| France | 9.39% |
| Germany | 8.69% |
| United Kingdom | 8.48% |
| Australia | 8.25% |
| The Netherlands | 4.53% |
| Israel | 3.88% |
| Spain | 3.20% |
Top Sector Holdings (08/25/16):
| Financials | 30.51% |
| Industrials | 17.74% |
| Consumer Staples | 14.56% |
| Utilities | 10.92% |
| Health Care | 10.33% |
| Telecommunication Services | 5.09% |
| Consumer Discretionary | 4.95% |
| Materials | 3.21% |
| Information Technology | 2.69% |
Useful Links:
HDMV Home Page