First Trust Dorsey Wright International Focus 5 ETF (IFV)

IFV holds 30 international stocks. It picks them by one simple rule: choose the stocks that have been going up the most. Hold them. Wait. Then rebalance and do it again.

The idea sounds like common sense. A company’s stock price goes up when business is improving and investors notice. Stocks keep rising because the winning streak continues. Stocks keep falling because bad news piles on. So pick the winners, hold them, then swap them out when new winners emerge.

IFV does this mechanically. A computer runs the numbers every quarter. It looks at about one year of price history, ranks every stock, and picks the top 30. No opinions involved. No one debating whether a CEO is trustworthy. Just the numbers.

How it differs from typical international funds

Most international stock ETFs own hundreds of companies. They try to own the whole market. IFV is the opposite. Own 30 stocks. But only the ones that momentum says are working right now.

This matters. Holding 30 stocks instead of 300 means the fund swings up and down more sharply. When momentum picks winners correctly, IFV zooms ahead. When momentum fails and yesterday’s winners crash, IFV crashes with them.

The Dorsey Wright system

Dorsey Wright Money Management built this momentum-screening approach decades ago and published academic research on it. They found that the rule works across many markets and time periods. The rule is transparent—anyone can look at the criteria and see why each stock is in the fund.

First Trust, the fund sponsor, operates IFV using the Dorsey Wright methodology. The result is a tool that responds automatically to changing markets. When winners shift from tech to energy to healthcare, the fund shifts with them because the rule adapts.

What you own changes constantly

IFV does not sit still. Portfolio turnover is high. Three months ago, the fund might have held many European banks. Today it holds technology stocks from Japan. Next quarter, it shifts again.

Sectors rotate in and out as winners change. Geographic mix rotates too. If European stocks are leading, Europe grows in the portfolio. If Japan’s stocks jump ahead, Japan grows. The fund just follows whichever group has momentum.

This churn is not a mistake. It is built into the strategy.

Costs and dividends

IFV trades like a normal stock on NASDAQ. Bid-ask spreads are tight. The expense ratio is moderate—higher than a simple index fund but reasonable for something this specialized.

The fund pays dividends from the stocks it holds. But momentum stocks often reinvest their cash into growth rather than pay dividends, so IFV’s dividend yield is modest.

The core risk: momentum might stop

The biggest risk is simple. What if momentum stops working? What if investors suddenly favor old, boring, mature companies that make steady profits over exciting growing firms? Then IFV underperforms.

Momentum has worked over long stretches of history. But there are stretches—sometimes years—when it does not work at all. During those times, IFV lags broad market indices.

The second risk is concentration. Only 30 stocks means individual losers hurt more. A fund with 500 stocks can ignore a few stumbles. IFV cannot.

Currency matters too. These stocks are priced in euros, yen, pounds, and other currencies. When the dollar strengthens, IFV’s value falls even if the stocks themselves are rising in their home markets.

Who this is for

IFV works for investors who believe momentum is real and will continue to work. It suits people comfortable with volatility and portfolio churn. It is not for someone wanting a quiet, boring, buy-once-and-forget holding.

IFV also works as a smaller piece of a larger portfolio. You keep most money in calm, broad-market funds. IFV becomes the aggressive satellite that can rotate in different directions.

How to check IFV

Visit First Trust’s website and download the latest fact sheet. It shows which stocks are in the portfolio now and how often the holdings change. Compare IFV’s returns to a simple international index fund. That difference shows whether momentum is working in your time frame. Read the prospectus. And understand: if IFV’s turnover is very high, that is intentional. Stocks are supposed to be constantly swapped out.