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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?
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $550.52 million, this makes it one of the average sized ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. 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%.
The fund has a 12-month trailing dividend yield of 0.26%.
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.
Representing 88.80% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Energy round out the top three.
When you look at individual holdings, Sterling Infrastructure Inc. (STRL - Free Report) accounts for about 4.43% of the fund's total assets, followed by Array Technologies, Inc. (ARRY - Free Report) and Emcor Group, Inc. (EME - Free Report) .
The top 10 holdings account for about 36.66% of total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added roughly 20.76% so far, and is up about 13.90% over the last 12 months (as of 12/05/2023). AIRR has traded between $43.35 and $55.56 in this past 52-week period.
AIRR has a beta of 1.23 and standard deviation of 24.56% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $4.07 billion in assets, Industrial Select Sector SPDR ETF has $14.88 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?
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $550.52 million, this makes it one of the average sized ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. 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%.
The fund has a 12-month trailing dividend yield of 0.26%.
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.
Representing 88.80% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Energy round out the top three.
When you look at individual holdings, Sterling Infrastructure Inc. (STRL - Free Report) accounts for about 4.43% of the fund's total assets, followed by Array Technologies, Inc. (ARRY - Free Report) and Emcor Group, Inc. (EME - Free Report) .
The top 10 holdings account for about 36.66% of total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF has added roughly 20.76% so far, and is up about 13.90% over the last 12 months (as of 12/05/2023). AIRR has traded between $43.35 and $55.56 in this past 52-week period.
AIRR has a beta of 1.23 and standard deviation of 24.56% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $4.07 billion in assets, Industrial Select Sector SPDR ETF has $14.88 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.