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Should First Trust Rising Dividend Achievers ETF (RDVY) Be on Your Investing Radar?
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If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) , a passively managed exchange traded fund launched on 01/07/2014.
The fund is sponsored by First Trust Advisors. It has amassed assets over $9.26 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.50%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.09%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 43.20% of the portfolio. Information Technology and Materials round out the top three.
Looking at individual holdings, Lennar Corporation (LEN - Free Report) accounts for about 2.36% of total assets, followed by Popular, Inc. (BPOP - Free Report) and Lam Research Corporation (LRCX - Free Report) .
The top 10 holdings account for about 22.33% of total assets under management.
Performance and Risk
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.
The ETF has added roughly 0.08% so far this year and is up about 16.41% in the last one year (as of 01/09/2024). In the past 52-week period, it has traded between $42.66 and $52.04.
The ETF has a beta of 1.15 and standard deviation of 20.03% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RDVY is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $54.70 billion in assets, Vanguard Value ETF has $106.90 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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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Should First Trust Rising Dividend Achievers ETF (RDVY) Be on Your Investing Radar?
If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) , a passively managed exchange traded fund launched on 01/07/2014.
The fund is sponsored by First Trust Advisors. It has amassed assets over $9.26 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.50%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.09%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 43.20% of the portfolio. Information Technology and Materials round out the top three.
Looking at individual holdings, Lennar Corporation (LEN - Free Report) accounts for about 2.36% of total assets, followed by Popular, Inc. (BPOP - Free Report) and Lam Research Corporation (LRCX - Free Report) .
The top 10 holdings account for about 22.33% of total assets under management.
Performance and Risk
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.
The ETF has added roughly 0.08% so far this year and is up about 16.41% in the last one year (as of 01/09/2024). In the past 52-week period, it has traded between $42.66 and $52.04.
The ETF has a beta of 1.15 and standard deviation of 20.03% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Rising Dividend Achievers ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RDVY is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $54.70 billion in assets, Vanguard Value ETF has $106.90 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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.