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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund launched on 01/07/2014.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $10.26 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. 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.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.49% for RDVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2%.
Sector Exposure and Top Holdings
ETFs offer 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.
For RDVY, it has heaviest allocation in the Financials sector --about 42.60% of the portfolio --while Information Technology and Materials round out the top three.
Taking into account individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 2.03% of the fund's total assets, followed by Nucor Corporation (NUE - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) .
RDVY's top 10 holdings account for about 20.1% of its total assets under management.
Performance and Risk
The ETF has added about 5.87% so far this year and was up about 22.19% in the last one year (as of 04/25/2024). In the past 52-week period, it has traded between $42.83 and $56.17.
RDVY has a beta of 1.15 and standard deviation of 19.56% 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 $54.66 billion in assets, Vanguard Value ETF has $112.86 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?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund launched on 01/07/2014.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $10.26 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. 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.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.49% for RDVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2%.
Sector Exposure and Top Holdings
ETFs offer 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.
For RDVY, it has heaviest allocation in the Financials sector --about 42.60% of the portfolio --while Information Technology and Materials round out the top three.
Taking into account individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 2.03% of the fund's total assets, followed by Nucor Corporation (NUE - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) .
RDVY's top 10 holdings account for about 20.1% of its total assets under management.
Performance and Risk
The ETF has added about 5.87% so far this year and was up about 22.19% in the last one year (as of 04/25/2024). In the past 52-week period, it has traded between $42.83 and $56.17.
RDVY has a beta of 1.15 and standard deviation of 19.56% 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 $54.66 billion in assets, Vanguard Value ETF has $112.86 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.