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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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Launched on 01/07/2014, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
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.
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.
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, and has been able to amass over $7.89 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for RDVY are 0.50%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.44%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 39.70% of the portfolio. Its Information Technology and Energy round out the top three.
When you look at individual holdings, Civitas Resources, Inc. (CIVI - Free Report) accounts for about 2.36% of the fund's total assets, followed by Conocophillips (COP - Free Report) and Cf Industries Holdings, Inc. (CF - Free Report) .
RDVY's top 10 holdings account for about 22.22% of its total assets under management.
Performance and Risk
So far this year, RDVY return is roughly 5.73%, and is up about 13.98% in the last one year (as of 10/19/2023). During this past 52-week period, the fund has traded between $40.35 and $49.58.
RDVY has a beta of 1.15 and standard deviation of 20.50% 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.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $47.86 billion in assets, Vanguard Value ETF has $97.98 billion. IWD has an expense ratio of 0.19% 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?
Launched on 01/07/2014, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
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.
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.
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, and has been able to amass over $7.89 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for RDVY are 0.50%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.44%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 39.70% of the portfolio. Its Information Technology and Energy round out the top three.
When you look at individual holdings, Civitas Resources, Inc. (CIVI - Free Report) accounts for about 2.36% of the fund's total assets, followed by Conocophillips (COP - Free Report) and Cf Industries Holdings, Inc. (CF - Free Report) .
RDVY's top 10 holdings account for about 22.22% of its total assets under management.
Performance and Risk
So far this year, RDVY return is roughly 5.73%, and is up about 13.98% in the last one year (as of 10/19/2023). During this past 52-week period, the fund has traded between $40.35 and $49.58.
RDVY has a beta of 1.15 and standard deviation of 20.50% 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.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $47.86 billion in assets, Vanguard Value ETF has $97.98 billion. IWD has an expense ratio of 0.19% 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.