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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) debuted on 01/07/2014, and offers broad exposure to the Style Box - Large Cap Value 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
RDVY is managed by First Trust Advisors, and this fund has amassed over $9.15 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for RDVY are 0.50%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.14%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 42.60% of the portfolio. Its Information Technology and Materials round out the top three.
Looking at individual holdings, Civitas Resources, Inc. (CIVI - Free Report) accounts for about 2.36% of total assets, followed by Conocophillips (COP - Free Report) and Cf Industries Holdings, Inc. (CF - Free Report) .
RDVY's top 10 holdings account for about 22.22% of its total assets under management.
Performance and Risk
The ETF return is roughly 20.03% and it's up approximately 21.19% so far this year and in the past one year (as of 12/20/2023), respectively. RDVY has traded between $42.66 and $51.98 during this last 52-week period.
RDVY has a beta of 1.15 and standard deviation of 20.09% 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 $55.25 billion in assets, Vanguard Value ETF has $105.72 billion. IWD has an expense ratio of 0.19% 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?
A smart beta exchange traded fund, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) debuted on 01/07/2014, and offers broad exposure to the Style Box - Large Cap Value 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
RDVY is managed by First Trust Advisors, and this fund has amassed over $9.15 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for RDVY are 0.50%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.14%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 42.60% of the portfolio. Its Information Technology and Materials round out the top three.
Looking at individual holdings, Civitas Resources, Inc. (CIVI - Free Report) accounts for about 2.36% of total assets, followed by Conocophillips (COP - Free Report) and Cf Industries Holdings, Inc. (CF - Free Report) .
RDVY's top 10 holdings account for about 22.22% of its total assets under management.
Performance and Risk
The ETF return is roughly 20.03% and it's up approximately 21.19% so far this year and in the past one year (as of 12/20/2023), respectively. RDVY has traded between $42.66 and $51.98 during this last 52-week period.
RDVY has a beta of 1.15 and standard deviation of 20.09% 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 $55.25 billion in assets, Vanguard Value ETF has $105.72 billion. IWD has an expense ratio of 0.19% 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.