Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the First Trust Rising Dividend Achievers ETF (RDVY Quick QuoteRDVY - Free Report) is a passively managed exchange traded fund launched on 01/07/2014.

The fund is sponsored by First Trust Advisors. It has amassed assets over $13.41 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 usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.49%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.56%.

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.

This ETF has heaviest allocation to the Financials sector--about 39.80% of the portfolio. Information Technology and Energy round out the top three.

Looking at individual holdings, Expand Energy Corporation (EXE Quick QuoteEXE - Free Report) accounts for about 2.09% of total assets, followed by Eog Resources, Inc. (EOG Quick QuoteEOG - Free Report) and Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) .

The top 10 holdings account for about 20.4% 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 5.14% so far this year and is up about 24.71% in the last one year (as of 01/21/2025). In the past 52-week period, it has traded between $50.66 and $64.37.

The ETF has a beta of 1.12 and standard deviation of 19.73% 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 reasonable 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 Schwab U.S. Dividend Equity ETF (SCHD Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $67.82 billion in assets, Vanguard Value ETF has $132.68 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.