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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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Making its debut on 03/10/2014, smart beta exchange traded fund First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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 $296.10 million, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
The fund has a 12-month trailing dividend yield of 0.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 93% of the portfolio.
Looking at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.92% of total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Proto Labs, Inc. (PRLB - Free Report) .
The top 10 holdings account for about 36.29% of total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added about 5.76% so far, and is up roughly 25.20% over the last 12 months (as of 05/11/2023). AIRR has traded between $36.26 and $51.63 in this past 52-week period.
The ETF has a beta of 1.25 and standard deviation of 27.62% for the trailing three-year period, making it a high risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust RBA American Industrial Renaissance ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $3.76 billion in assets, Industrial Select Sector SPDR ETF has $13.06 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?
Making its debut on 03/10/2014, smart beta exchange traded fund First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) provides investors broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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 $296.10 million, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
The fund has a 12-month trailing dividend yield of 0.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 93% of the portfolio.
Looking at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.92% of total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Proto Labs, Inc. (PRLB - Free Report) .
The top 10 holdings account for about 36.29% of total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added about 5.76% so far, and is up roughly 25.20% over the last 12 months (as of 05/11/2023). AIRR has traded between $36.26 and $51.63 in this past 52-week period.
The ETF has a beta of 1.25 and standard deviation of 27.62% for the trailing three-year period, making it a high risk choice in the space. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust RBA American Industrial Renaissance ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $3.76 billion in assets, Industrial Select Sector SPDR ETF has $13.06 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.