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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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
Because the fund has amassed over $9.42 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. Before fees and expenses, this particular fund 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.
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's 12-month trailing dividend yield comes in at 2.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RDVY, it has heaviest allocation in the Financials sector --about 42.30% of the portfolio --while Information Technology and Materials round out the top three.
Taking into account individual holdings, Lennar Corporation (LEN - Free Report) accounts for about 2.36% of the fund's total assets, followed by Popular, Inc. (BPOP - Free Report) and Lam Research Corporation (LRCX - Free Report) .
RDVY's top 10 holdings account for about 22.33% of its total assets under management.
Performance and Risk
The ETF return is roughly 0.31% so far this year and was up about 10.50% in the last one year (as of 02/19/2024). In the past 52-week period, it has traded between $42.66 and $52.31.
RDVY has a beta of 1.15 and standard deviation of 19.90% 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.83 billion in assets, Vanguard Value ETF has $108.67 billion. SCHD has an expense ratio of 0.06% 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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
Because the fund has amassed over $9.42 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. Before fees and expenses, this particular fund 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.
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's 12-month trailing dividend yield comes in at 2.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RDVY, it has heaviest allocation in the Financials sector --about 42.30% of the portfolio --while Information Technology and Materials round out the top three.
Taking into account individual holdings, Lennar Corporation (LEN - Free Report) accounts for about 2.36% of the fund's total assets, followed by Popular, Inc. (BPOP - Free Report) and Lam Research Corporation (LRCX - Free Report) .
RDVY's top 10 holdings account for about 22.33% of its total assets under management.
Performance and Risk
The ETF return is roughly 0.31% so far this year and was up about 10.50% in the last one year (as of 02/19/2024). In the past 52-week period, it has traded between $42.66 and $52.31.
RDVY has a beta of 1.15 and standard deviation of 19.90% 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.83 billion in assets, Vanguard Value ETF has $108.67 billion. SCHD has an expense ratio of 0.06% 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.