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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?
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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $7.72 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, RDVY 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.
The fund has a 12-month trailing dividend yield of 2.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For RDVY, it has heaviest allocation in the Financials sector --about 37% of the portfolio --while Information Technology and Healthcare round out the top three.
Looking at individual holdings, Freeport-Mcmoran Inc. (FCX - Free Report) accounts for about 2.20% of total assets, followed by Jefferies Financial Group Inc. (JEF - Free Report) and Cognizant Technology Solutions Corporation (CTSH - Free Report) .
The top 10 holdings account for about 21.33% of total assets under management.
Performance and Risk
The ETF return is roughly 1.57% and is down about -7.20% so far this year and in the past one year (as of 04/05/2023), respectively. RDVY has traded between $38.88 and $49.12 during this last 52-week period.
RDVY has a beta of 1.15 and standard deviation of 23.57% 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 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 $50.43 billion in assets, Vanguard Value ETF has $101.10 billion. IWD has an expense ratio of 0.18% 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?
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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $7.72 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, RDVY 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.
The fund has a 12-month trailing dividend yield of 2.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For RDVY, it has heaviest allocation in the Financials sector --about 37% of the portfolio --while Information Technology and Healthcare round out the top three.
Looking at individual holdings, Freeport-Mcmoran Inc. (FCX - Free Report) accounts for about 2.20% of total assets, followed by Jefferies Financial Group Inc. (JEF - Free Report) and Cognizant Technology Solutions Corporation (CTSH - Free Report) .
The top 10 holdings account for about 21.33% of total assets under management.
Performance and Risk
The ETF return is roughly 1.57% and is down about -7.20% so far this year and in the past one year (as of 04/05/2023), respectively. RDVY has traded between $38.88 and $49.12 during this last 52-week period.
RDVY has a beta of 1.15 and standard deviation of 23.57% 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 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 $50.43 billion in assets, Vanguard Value ETF has $101.10 billion. IWD has an expense ratio of 0.18% 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.