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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?
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.
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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $8.16 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. RDVY seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.34%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 40.30% of the portfolio. Information Technology and Energy round out the top three.
Taking into account individual holdings, Louisiana-Pacific Corporation (LPX - Free Report) accounts for about 2.27% of the fund's total assets, followed by Nucor Corporation (NUE - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
Its top 10 holdings account for approximately 20.91% of RDVY's total assets under management.
Performance and Risk
So far this year, RDVY return is roughly 9%, and is up about 4.41% in the last one year (as of 08/17/2023). During this past 52-week period, the fund has traded between $38.88 and $49.58.
RDVY has a beta of 1.15 and standard deviation of 20.83% 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 a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $50.19 billion in assets, Vanguard Value ETF has $100.71 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?
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.
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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $8.16 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. RDVY seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.34%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 40.30% of the portfolio. Information Technology and Energy round out the top three.
Taking into account individual holdings, Louisiana-Pacific Corporation (LPX - Free Report) accounts for about 2.27% of the fund's total assets, followed by Nucor Corporation (NUE - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
Its top 10 holdings account for approximately 20.91% of RDVY's total assets under management.
Performance and Risk
So far this year, RDVY return is roughly 9%, and is up about 4.41% in the last one year (as of 08/17/2023). During this past 52-week period, the fund has traded between $38.88 and $49.58.
RDVY has a beta of 1.15 and standard deviation of 20.83% 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 a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $50.19 billion in assets, Vanguard Value ETF has $100.71 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.