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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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Launched on 01/07/2014, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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 $8.75 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, before fees and expenses, seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index.
The NASDAQ US Rising Dividend Achievers 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 RDVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.30%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 34.90% of the portfolio. Its Information Technology and Healthcare round out the top three.
Looking at individual holdings, Eog Resources, Inc. (EOG - Free Report) accounts for about 2.11% of total assets, followed by Pioneer Natural Resources Company (PXD - Free Report) and Archer-Daniels-Midland Company (ADM - Free Report) .
The top 10 holdings account for about 20.48% of total assets under management.
Performance and Risk
So far this year, RDVY has lost about -14.57%, and is down about -7.30% in the last one year (as of 05/25/2022). During this past 52-week period, the fund has traded between $43.80 and $52.79.
The fund has a beta of 1.13 and standard deviation of 28.33% for the trailing three-year period, which makes RDVY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $53.84 billion in assets, Vanguard Value ETF has $97.91 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?
Launched on 01/07/2014, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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 $8.75 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, before fees and expenses, seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index.
The NASDAQ US Rising Dividend Achievers 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 RDVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.30%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 34.90% of the portfolio. Its Information Technology and Healthcare round out the top three.
Looking at individual holdings, Eog Resources, Inc. (EOG - Free Report) accounts for about 2.11% of total assets, followed by Pioneer Natural Resources Company (PXD - Free Report) and Archer-Daniels-Midland Company (ADM - Free Report) .
The top 10 holdings account for about 20.48% of total assets under management.
Performance and Risk
So far this year, RDVY has lost about -14.57%, and is down about -7.30% in the last one year (as of 05/25/2022). During this past 52-week period, the fund has traded between $43.80 and $52.79.
The fund has a beta of 1.13 and standard deviation of 28.33% for the trailing three-year period, which makes RDVY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $53.84 billion in assets, Vanguard Value ETF has $97.91 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.