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Should First Trust Rising Dividend Achievers ETF (RDVY) Be on Your Investing Radar?
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The First Trust Rising Dividend Achievers ETF (RDVY - Free Report) was launched on 01/07/2014, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $462.46 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.50%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.35%.
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.
This ETF has heaviest allocation to the Financials sector--about 29.40% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Foot Locker, Inc. (FL - Free Report) accounts for about 2.22% of total assets, followed by Northrop Grumman Corporation (NOC - Free Report) and Humana Inc. (HUM - Free Report) .
The top 10 holdings account for about 21.44% of total assets under management.
Performance and Risk
RDVY seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index before fees and expenses. The Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends.
The ETF has gained about 1.08% so far this year and was up about 17.51% in the last one year (as of 04/17/2018). In the past 52-week period, it has traded between $26.13 and $31.88.
The ETF has a beta of 1.01 and standard deviation of 15.19% for the trailing three-year period, making it a medium risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Rising Dividend Achievers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RDVY is an excellent option for investors seeking exposure to the Large Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Value ETF (VTV - Free Report) and the iShares Russell 1000 Value ETF (IWD - Free Report) track a similar index. While Vanguard Value ETF has $36.06 B in assets, iShares Russell 1000 Value ETF has $36.42 B. VTV has an expense ratio of 0.06% and IWD charges 0.20%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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Should First Trust Rising Dividend Achievers ETF (RDVY) Be on Your Investing Radar?
The First Trust Rising Dividend Achievers ETF (RDVY - Free Report) was launched on 01/07/2014, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $462.46 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.50%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.35%.
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.
This ETF has heaviest allocation to the Financials sector--about 29.40% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Foot Locker, Inc. (FL - Free Report) accounts for about 2.22% of total assets, followed by Northrop Grumman Corporation (NOC - Free Report) and Humana Inc. (HUM - Free Report) .
The top 10 holdings account for about 21.44% of total assets under management.
Performance and Risk
RDVY seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index before fees and expenses. The Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends.
The ETF has gained about 1.08% so far this year and was up about 17.51% in the last one year (as of 04/17/2018). In the past 52-week period, it has traded between $26.13 and $31.88.
The ETF has a beta of 1.01 and standard deviation of 15.19% for the trailing three-year period, making it a medium risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Rising Dividend Achievers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RDVY is an excellent option for investors seeking exposure to the Large Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Value ETF (VTV - Free Report) and the iShares Russell 1000 Value ETF (IWD - Free Report) track a similar index. While Vanguard Value ETF has $36.06 B in assets, iShares Russell 1000 Value ETF has $36.42 B. VTV has an expense ratio of 0.06% and IWD charges 0.20%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.