First Trust Advisors L.P. (First Trust) has launched a new index-based exchange-traded fund (ETF), the First Trust Dorsey Wright DALI 1 ETF. The fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an index called the Nasdaq Dorsey Wright DALI 1 Index.
The index is designed to evaluate four broad asset classes: Domestic Equity, International Equity, Fixed Income and Commodities. The Dynamic Asset Level Investing process (the DALI process) is used to identify the asset class best positioned to outperform the market generally. The DALI process was designed as a tool to provide guidance for asset allocation decisions among asset classes, as well as within asset classes, steering an investor toward those areas of the market that Nasdaq Dorsey Wright believes may outperform. The DALI process is used to evaluate supply and demand forces of asset classes, and rank them from strongest to weakest based on Nasdaq Dorsey Wright’s proprietary relative strength methodology. The asset class with the highest relative strength score is selected for inclusion in the index and the fund’s assets will be allocated to ETFs that provide exposure to the asset class.
The index construction process was developed by Nasdaq Dorsey Wright, a registered investment advisory firm that provides professional management and investment research services for numerous broker/dealers and large institutions around the world. The cornerstone of their approach is technical analysis, and in particular, the law of supply and demand.
“In times of increasing volatility, the ability to differentiate between the values of asset classes has never been more important. Our relative strength-based asset class ranking system, DALI, has been a mainstay of our research for over a decade, and we are excited to bring this unique strategy to market with First Trust,” says Jay Gragnani, head of Research and Client Engagement for Nasdaq Dorsey Wright.