Unpacking the First Trust Horizon Managed Volatility Domestic ETF

What is the HUSV ETF?

Let’s dive into the world of exchange-traded funds (ETFs) and take a closer look at First Trust Horizon Managed Volatility Domestic ETF, also known as HUSV. This particular ETF holds 75 stocks that are selected for their low volatility, with a significant exposure in sectors such as technology, financials, industrials, and utilities. Sounds like a pretty well-rounded mix, right?

Performance Review

However, when it comes to performance, the HUSV ETF has been lagging behind the S&P 500 by 4.9% annually since 2016. Ouch. Not only that, it also has a lower Sharpe ratio and experienced a deeper drawdown in 2020. Despite its well-diversified nature, the higher fees and lower historical returns of HUSV make it less appealing compared to other low-volatility ETFs out there.

How Will This Affect You?

So, what does all of this mean for you as an investor? Well, if you have been considering investing in the HUSV ETF, you may want to reconsider your options. The underperformance and higher fees associated with this ETF could potentially eat into your returns over time. It might be worth exploring other low-volatility ETFs that offer better value for your money.

Global Impact

In the grand scheme of things, the underperformance of the HUSV ETF may not have a significant impact on the global market. However, it does serve as a cautionary tale for investors who are looking to navigate the world of ETFs. It’s a reminder that past performance is not always indicative of future results, and that thorough research and due diligence are key when building a diversified investment portfolio.

Conclusion

While the First Trust Horizon Managed Volatility Domestic ETF may have its strengths in terms of low volatility and sector exposure, its underperformance and higher fees dampen its appeal for investors. As you continue on your investment journey, it’s important to weigh the pros and cons of different ETF options to ensure that you are making informed decisions that align with your financial goals.