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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $237.18 million, making it one of the average sized ETFs in the Industrials ETFs. AIRR, before fees and expenses, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.06%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 89% of the portfolio. Financials and Energy round out the top three.
When you look at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.19% of the fund's total assets, followed by Mueller Water Products, Inc. (MWA - Free Report) and Hubbell Incorporated (HUBB - Free Report) .
AIRR's top 10 holdings account for about 30.76% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added roughly 30.79% so far, and it's up approximately 56.20% over the last 12 months (as of 10/27/2021). AIRR has traded between $26.32 and $43.63 in this past 52-week period.
The fund has a beta of 1.30 and standard deviation of 32.17% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 59 holdings, it effectively diversifies company-specific risk.
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 $5.44 billion in assets, Industrial Select Sector SPDR ETF has $18.26 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.
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?
Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $237.18 million, making it one of the average sized ETFs in the Industrials ETFs. AIRR, before fees and expenses, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.06%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Industrials sector - about 89% of the portfolio. Financials and Energy round out the top three.
When you look at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.19% of the fund's total assets, followed by Mueller Water Products, Inc. (MWA - Free Report) and Hubbell Incorporated (HUBB - Free Report) .
AIRR's top 10 holdings account for about 30.76% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added roughly 30.79% so far, and it's up approximately 56.20% over the last 12 months (as of 10/27/2021). AIRR has traded between $26.32 and $43.63 in this past 52-week period.
The fund has a beta of 1.30 and standard deviation of 32.17% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 59 holdings, it effectively diversifies company-specific risk.
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 $5.44 billion in assets, Industrial Select Sector SPDR ETF has $18.26 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.
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.