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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) made its debut on 03/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
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.
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.
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
AIRR is managed by First Trust Advisors, and this fund has amassed over $407.82 million, which makes it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, 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
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.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.22%.
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.
For AIRR, it has heaviest allocation in the Industrials sector --about 93.20% of the portfolio.
When you look at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.92% of the fund's 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 gained about 21.78% so far, and is up roughly 41.72% over the last 12 months (as of 07/11/2023). AIRR has traded between $37.08 and $54.27 in this past 52-week period.
AIRR has a beta of 1.26 and standard deviation of 25.41% for the trailing three-year period, which makes the fund 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 $4.16 billion in assets, Industrial Select Sector SPDR ETF has $15.06 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?
The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) made its debut on 03/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
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.
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.
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
AIRR is managed by First Trust Advisors, and this fund has amassed over $407.82 million, which makes it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, 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
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.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.22%.
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.
For AIRR, it has heaviest allocation in the Industrials sector --about 93.20% of the portfolio.
When you look at individual holdings, Encore Wire Corporation (WIRE - Free Report) accounts for about 3.92% of the fund's 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 gained about 21.78% so far, and is up roughly 41.72% over the last 12 months (as of 07/11/2023). AIRR has traded between $37.08 and $54.27 in this past 52-week period.
AIRR has a beta of 1.26 and standard deviation of 25.41% for the trailing three-year period, which makes the fund 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 $4.16 billion in assets, Industrial Select Sector SPDR ETF has $15.06 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.