This fund of funds tracks the Dorsey Wright Dynamic Focus Five Index. It selects the five First Trust sector and industry ETFs with the highest relative strength (momentum) and invests most of its net assets in them.

It suits investors who want their exposure to shift automatically toward industries with strong momentum, without timing individual sectors.

It is a passively managed ETF (index tracking) run by First Trust.

From the pool of sector and industry ETFs managed by First Trust, the fund selects the five with the highest relative strength according to the index methodology. At each periodic rebalancing, sectors whose momentum has weakened are removed and replaced with stronger ones, creating a rotation structure.

• Fund of funds structure that holds ETFs rather than individual stocks
• Automatic sector rotation based on relative strength

Assets under management (AUM) stand at $109.9M, and the total expense ratio is 0.87% per year.

The comparison ETFs listed in the same category are large-cap core and sector ETFs with different strategy profiles, so they are better used as a reference than for direct comparison.

Because the underlying ETF lineup changes periodically under the rotation methodology, return patterns vary depending on whether particular sectors are strong or weak. Rather than assuming a definite direction, it is important to check how the sector holdings change.

Given its fund of funds nature, fund flows tend to track market interest in the underlying sector ETFs, and inflows of thematic capital have generally been small to mid-sized.

Its strength is the convenience of automatically shifting exposure to momentum sectors, while its weaknesses are the layered fee structure and the uncertainty created by frequent changes in holdings.

There are few comparable listed funds that use exactly the same rotation strategy, so direct comparison data is limited. However, its sister fund FV is a similar rotation product that uses the same First Trust Dorsey Wright methodology and is worth a look. The underlying ETFs, such as FTXL (semiconductors), FBT (biotech), FDN (internet), and FXO (financials), also help investors check directly which sectors the fund is currently exposed to.

Here are the points to review before investing in FVC. Investors should understand in advance the nature of a rotation strategy that holds sector ETFs rather than individual stocks, as well as its layered fee structure, and should also confirm that its sector holdings change regularly.

Sector reversals at the time of rebalancing are the main risk factor, and when momentum breaks down sharply, the replacement of held sectors may come too late. Investors should also note that, because of the fund of funds structure, the fees of the underlying ETFs may be incurred indirectly.

The fund suits investors who want exposure to momentum rotation without making their own sector timing decisions, and it is advisable to make an investment decision that takes into account both the layered fee structure and the frequency of changes in holdings.