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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) made its debut on 03/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
AIRR is managed by First Trust Advisors, and this fund has amassed over $649.58 million, which makes it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, AIRR seeks to match the performance of the Richard Bernstein Advisors American Industrial Renaissance Index.
The Richard Bernstein Advisors American Industrial Renaissance Index is measures the performance of small and mid cap US companies in the industrial and community banking sectors.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.23%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
AIRR's heaviest allocation is in the Industrials sector, which is about 87.10% of the portfolio. Its Financials and Materials round out the top three.
When you look at individual holdings, Dycom Industries, Inc. (DY - Free Report) accounts for about 4.56% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Federal Signal Corporation (FSS - Free Report) .
Its top 10 holdings account for approximately 39.32% of AIRR's total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has lost about -0.17% so far, and is up about 16.21% over the last 12 months (as of 02/05/2024). AIRR has traded between $44.19 and $58.68 in this past 52-week period.
AIRR has a beta of 1.22 and standard deviation of 24.16% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 46 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.50 billion in assets, Industrial Select Sector SPDR ETF has $15.97 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) made its debut on 03/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
AIRR is managed by First Trust Advisors, and this fund has amassed over $649.58 million, which makes it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, AIRR seeks to match the performance of the Richard Bernstein Advisors American Industrial Renaissance Index.
The Richard Bernstein Advisors American Industrial Renaissance Index is measures the performance of small and mid cap US companies in the industrial and community banking sectors.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.70%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.23%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
AIRR's heaviest allocation is in the Industrials sector, which is about 87.10% of the portfolio. Its Financials and Materials round out the top three.
When you look at individual holdings, Dycom Industries, Inc. (DY - Free Report) accounts for about 4.56% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Federal Signal Corporation (FSS - Free Report) .
Its top 10 holdings account for approximately 39.32% of AIRR's total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has lost about -0.17% so far, and is up about 16.21% over the last 12 months (as of 02/05/2024). AIRR has traded between $44.19 and $58.68 in this past 52-week period.
AIRR has a beta of 1.22 and standard deviation of 24.16% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 46 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $4.50 billion in assets, Industrial Select Sector SPDR ETF has $15.97 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.