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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) was launched on 03/10/2014, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. AIRR has been able to amass assets over $293.77 million, making it one of the average sized ETFs in the Industrials ETFs. AIRR, before fees and expenses, 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.
The fund has a 12-month trailing dividend yield of 0.11%.
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 AIRR, it has heaviest allocation in the Industrials sector --about 91.90% of the portfolio.
When you look at individual holdings, Array Technologies, Inc. (ARRY - Free Report) accounts for about 4.48% of the fund's total assets, followed by Api Group Corporation (APG - Free Report) and Atkore Inc. (ATKR - Free Report) .
Its top 10 holdings account for approximately 38.69% of AIRR's total assets under management.
Performance and Risk
The ETF return is roughly 14.76% so far this year and is up about 22.07% in the last one year (as of 03/09/2023). In the past 52-week period, it has traded between $36.26 and $51.63.
The ETF has a beta of 1.26 and standard deviation of 33.53% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $3.90 billion in assets, Industrial Select Sector SPDR ETF has $14.62 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
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?
The First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) was launched on 03/10/2014, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. AIRR has been able to amass assets over $293.77 million, making it one of the average sized ETFs in the Industrials ETFs. AIRR, before fees and expenses, 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.
The fund has a 12-month trailing dividend yield of 0.11%.
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 AIRR, it has heaviest allocation in the Industrials sector --about 91.90% of the portfolio.
When you look at individual holdings, Array Technologies, Inc. (ARRY - Free Report) accounts for about 4.48% of the fund's total assets, followed by Api Group Corporation (APG - Free Report) and Atkore Inc. (ATKR - Free Report) .
Its top 10 holdings account for approximately 38.69% of AIRR's total assets under management.
Performance and Risk
The ETF return is roughly 14.76% so far this year and is up about 22.07% in the last one year (as of 03/09/2023). In the past 52-week period, it has traded between $36.26 and $51.63.
The ETF has a beta of 1.26 and standard deviation of 33.53% for the trailing three-year period, making it a high risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust RBA American Industrial Renaissance ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $3.90 billion in assets, Industrial Select Sector SPDR ETF has $14.62 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
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.