This factor ETF tracks the Dorsey Wright Momentum Plus Low Volatility Index. From the Nasdaq US large- and mid-cap universe, it uses a rules-based process to select dozens of stocks with high relative strength and low volatility.

It pursues trend and stability together, which suits investors who want lower volatility than a pure large-cap index.

It is a passive (index-tracking) ETF managed by First Trust.

From the constituents of the Nasdaq US large- and mid-cap index, the fund first picks stocks with high relative strength, then narrows them down to those with low volatility and holds them according to set rules. The key feature is that the two factors, momentum and low volatility, are applied in sequence.

• Combines the momentum and low-volatility factors in sequence
• Rules-based quantitative selection minimizes discretionary intervention

Assets under management (AUM) stand at $73.8M, and the total expense ratio (Expense Ratio) is 0.60% per year.

Unlike a standalone low-volatility ETF, this fund first applies a relative strength screen, so even within the same low-volatility category, its holdings can differ.

Low-volatility factors tend to see relatively mild drawdowns when markets turn shaky, but in strong rallies they may lag core indexes dominated by large-cap growth stocks.

Capital moves in response to demand for both defensive characteristics and a trend component, and interest in low-volatility factor products sometimes grows during periods of rising market volatility.

Its strength is a rules-based strategy that targets momentum and low volatility together, while the main caution is that factor performance can diverge depending on the market regime.

Compared with the representative low-volatility ETFs shown in the table that target the broad large-cap market, such as USMV, SPLV, and FDLO, DVOL differs in that it adds a relative strength screen. Outside the table, you can also consider MTUM, which focuses on the pure momentum factor, SPHD, which combines high dividends with low volatility, FVD, a dividend growth ETF also managed by First Trust, and EFAV, which offers exposure to low-volatility developed-market stocks outside the U.S.

Here are the points to review before investing in DVOL. Because it is a factor structure that combines momentum and low volatility, it is wise to check in advance how the factors are combined, how it performs in different market regimes, its long-term holding costs, and its currency exposure.

Low-volatility factors can be left behind by core indexes in bull markets, and there is a lag in reflecting market changes between periodic reconstitutions. By the nature of factors, performance can diverge sharply depending on the market regime.

It is worth considering if you are looking for a rules-based factor product that targets both trend and stability. If you want pure momentum or standalone low-volatility exposure, it is advisable to compare alternatives such as MTUM and USMV before choosing.