That's not to say these ETFs aren't doing some interesting things.
(They also might be worth a look from any investor interested in ETFs, since one of the biggest reasons to stay out of new ETFs is the typical lack of assets, which raises the risk that the ETF will not be able to accurately replicate its benchmark, as well as the risk the ETF fails and closes down, returning money to investors and causing a taxable event.)
The First Trust Dorsey Wright Focus 5 is an ETF fund of funds that capitalizes on exactly what investors have been looking to capture: the benefits of active management without being truly active, and market momentum.
The Dorsey Wright Focus 5 ETF uses existing First Trust ETFs and changes the portfolio every week based on technical analysis of the market. "Even though it is based on an index, it has a high level of 'activeness' to it," Britt said, referring to the fact that many investors are opting for ETFs that take what is known as a smart beta approach rather than flocking to true active management.
"If I were to critique, it's not cheap [a 95-basis-point expense ratio]," Goldsborough said, but he added, "Right now investors are interested in momentum strategies." Investors and RIAs are believers in this notion of factor investing and using ETFs to do it."
Deep Value, meanwhile, takes what Britt called "more of a private equity approach." In other words, picking stocks based on what they might be worth if the companies were chopped up and sold off—"the juicy targets," Britt said, where enterprise value is greater than current market value. The sum-of-all-parts approach to investing makes sense, given the rise of the activist investor and more companies being targeted for being undervalued. You can take a look at which companies DVP thinks are "juicy targets" right now here. Or for investors with a skeptical bent, take a look at some criticism the breakout ETF received from Barron's. It also has a fairly high expense ratio for an ETF, at 80 basis points.