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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
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 $854.88 million, this makes it one of the average sized ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. Before fees and expenses, AIRR 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
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 cousins, other things remaining the same.
Operating expenses on an annual basis are 0.70% for AIRR, making it one of the most expensive products in the space.
AIRR's 12-month trailing dividend yield is 0.17%.
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.
This ETF has heaviest allocation in the Industrials sector - about 91.10% of the portfolio.
Taking into account individual holdings, Powell Industries, Inc. (POWL - Free Report) accounts for about 5.52% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Emcor Group, Inc. (EME - Free Report) .
Its top 10 holdings account for approximately 41.04% of AIRR's total assets under management.
Performance and Risk
So far this year, AIRR has added about 12.41%, and is up about 41.57% in the last one year (as of 04/12/2024). During this past 52-week period, the fund has traded between $44.19 and $67.33.
AIRR has a beta of 1.24 and standard deviation of 23.77% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 48 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 $5.23 billion in assets, Industrial Select Sector SPDR ETF has $18.28 billion. VIS has an expense ratio of 0.10% and XLI charges 0.09%.
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?
Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
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 $854.88 million, this makes it one of the average sized ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. Before fees and expenses, AIRR 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
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 cousins, other things remaining the same.
Operating expenses on an annual basis are 0.70% for AIRR, making it one of the most expensive products in the space.
AIRR's 12-month trailing dividend yield is 0.17%.
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.
This ETF has heaviest allocation in the Industrials sector - about 91.10% of the portfolio.
Taking into account individual holdings, Powell Industries, Inc. (POWL - Free Report) accounts for about 5.52% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX - Free Report) and Emcor Group, Inc. (EME - Free Report) .
Its top 10 holdings account for approximately 41.04% of AIRR's total assets under management.
Performance and Risk
So far this year, AIRR has added about 12.41%, and is up about 41.57% in the last one year (as of 04/12/2024). During this past 52-week period, the fund has traded between $44.19 and $67.33.
AIRR has a beta of 1.24 and standard deviation of 23.77% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 48 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 $5.23 billion in assets, Industrial Select Sector SPDR ETF has $18.28 billion. VIS has an expense ratio of 0.10% and XLI charges 0.09%.
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.