ETF Watch: Another Dorsey, Wright Fund Debuts

June 02, 2016

State Street Global Advisors is set to launch on the Nasdaq stock market a fund-of-funds ETF based on a Dorsey, Wright index, similar to ETFs launched recently by PowerShares and First Trust. The SPDR Dorsey Wright Fixed Income Allocation ETF (DWFI) will invest in four funds from a roster of some 20 fixed-income SPDRs, weekly selecting its ETF components based their relative strength compared with the rest of the selection universe.

Relative strength is used by Dorsey, Wright & Associates in its proprietary methodologies to measure the price momentum of individual securities relative to the price momentum of the other securities within a group.

The new fund comes with an expense ratio of 0.60%. DWFI’s components are equally weighted at 25% each upon rebalancing, and a buffer zone is in place with regard to components’ relative strength in order to keep a lid on turnover.

In March, the PowerShares DWA Tactical Multi-Asset Income Portfolio (DWIN) and the First Trust Dorsey Wright Dynamic Focus 5 ETF (FVC) both rolled out, also on the Nasdaq. The funds, like DWFI, use a rotation strategy with regular rebalancings based on relative strength. And DWIN, like DWFI, has a focus on income. However, FVC and DWIN are more expensive than DWFI. FVC charges 0.79%, while DWIN charges 0.69%.

Contact Heather Bell at [email protected].

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