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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) debuted on 03/10/2014, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $236.96 million, making 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.70% for AIRR, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.06%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For AIRR, it has heaviest allocation in the Industrials sector --about 89.30% of the portfolio --while Financials and Energy round out the top three.
Looking at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.90% of total assets, followed by Comfort Systems Usa, Inc, (FIX - Free Report) and Api Group Corporation (APG - Free Report) .
AIRR's top 10 holdings account for about 33.2% of its total assets under management.
Performance and Risk
The ETF has lost about -7.57% and is up roughly 7.63% so far this year and in the past one year (as of 02/28/2022), respectively. AIRR has traded between $38.31 and $47.78 during this last 52-week period.
AIRR has a beta of 1.26 and standard deviation of 32.17% for the trailing three-year period, which makes the fund a high risk choice in the 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 $4.60 billion in assets, Industrial Select Sector SPDR ETF has $16.13 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?
A smart beta exchange traded fund, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) debuted on 03/10/2014, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $236.96 million, making 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.70% for AIRR, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.06%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For AIRR, it has heaviest allocation in the Industrials sector --about 89.30% of the portfolio --while Financials and Energy round out the top three.
Looking at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.90% of total assets, followed by Comfort Systems Usa, Inc, (FIX - Free Report) and Api Group Corporation (APG - Free Report) .
AIRR's top 10 holdings account for about 33.2% of its total assets under management.
Performance and Risk
The ETF has lost about -7.57% and is up roughly 7.63% so far this year and in the past one year (as of 02/28/2022), respectively. AIRR has traded between $38.31 and $47.78 during this last 52-week period.
AIRR has a beta of 1.26 and standard deviation of 32.17% for the trailing three-year period, which makes the fund a high risk choice in the 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 $4.60 billion in assets, Industrial Select Sector SPDR ETF has $16.13 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.