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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund launched on 01/07/2014.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $7.15 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. This particular fund 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.
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.
Operating expenses on an annual basis are 0.50% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RDVY's heaviest allocation is in the Information Technology sector, which is about 36.10% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Jefferies Financial Group Inc. (JEF - Free Report) accounts for about 2.22% of the fund's total assets, followed by Bank Of America Corporation (BAC - Free Report) and The Bank Of New York Mellon Corporation (BK - Free Report) .
RDVY's top 10 holdings account for about 21.43% of its total assets under management.
Performance and Risk
So far this year, RDVY has added about 33.01%, and it's up approximately 40.25% in the last one year (as of 11/17/2021). During this past 52-week period, the fund has traded between $36.80 and $51.89.
RDVY has a beta of 1.19 and standard deviation of 27.75% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.91 billion in assets, Vanguard Value ETF has $89.77 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
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 Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund launched on 01/07/2014.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $7.15 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. This particular fund 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.
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.
Operating expenses on an annual basis are 0.50% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RDVY's heaviest allocation is in the Information Technology sector, which is about 36.10% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Jefferies Financial Group Inc. (JEF - Free Report) accounts for about 2.22% of the fund's total assets, followed by Bank Of America Corporation (BAC - Free Report) and The Bank Of New York Mellon Corporation (BK - Free Report) .
RDVY's top 10 holdings account for about 21.43% of its total assets under management.
Performance and Risk
So far this year, RDVY has added about 33.01%, and it's up approximately 40.25% in the last one year (as of 11/17/2021). During this past 52-week period, the fund has traded between $36.80 and $51.89.
RDVY has a beta of 1.19 and standard deviation of 27.75% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.91 billion in assets, Vanguard Value ETF has $89.77 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
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.