First Trust Canada has launched the country’s first U.S. sector rotation ETF, First Trust Dorsey Wright Dynamic U.S. Sector Rotation Index ETF (CAD-hedged; TSX: FSR).

The ETF “provides a simplified way for Canadian investors to gain exposure to a sector rotation strategy, with the ability to allocate to cash equivalents,” says Karl Cheong, CFA, head of ETFs at First Trust Canada.

Read: First Asset launches two equity ETFs

The ETF seeks to replicate the performance of a total return U.S. equities industry sector rotational index, net of expenses. Currently, the ETF seeks to replicate the performance of the Dorsey Wright Dynamic U.S. Sector Focus Five Index, net of expenses, and will generally seek to hedge most of its U.S. dollar currency exposure back to the Canadian dollar.

Read: Horizons opens two currency-hedged ETFs

The Dorsey Wright index, owned by NASDAQ, uses a rules-based U.S. sector rotation strategy, which uses proprietary relative-strength signals to provide equal-weighted exposure to five TSX-listed U.S. sector-index ETFs that represent the strongest U.S. sectors. The sectors include consumer staples, consumer discretionary, energy, financial, industrials, healthcare, materials, technology and utilities. Exposure to U.S. cash equivalents is also evaluated, and the inclusion and weight of a U.S. cash allocation in the index is adjusted based on its rank relative to the U.S. sectors.

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