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Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) debuted on 01/07/2014, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
RDVY is managed by First Trust Advisors, and this fund has amassed over $10.77 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
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.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.97%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 41.10% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 2.03% of total assets, followed by Nucor Corporation (NUE - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) .
Its top 10 holdings account for approximately 20.1% of RDVY's total assets under management.
Performance and Risk
The ETF has gained about 7.59% and was up about 23.17% so far this year and in the past one year (as of 06/25/2024), respectively. RDVY has traded between $43.44 and $56.17 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 19.42% 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 is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $56.23 billion in assets, Vanguard Value ETF has $117.32 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?
A smart beta exchange traded fund, the First Trust Rising Dividend Achievers ETF (RDVY - Free Report) debuted on 01/07/2014, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
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
RDVY is managed by First Trust Advisors, and this fund has amassed over $10.77 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
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.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.97%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 41.10% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 2.03% of total assets, followed by Nucor Corporation (NUE - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) .
Its top 10 holdings account for approximately 20.1% of RDVY's total assets under management.
Performance and Risk
The ETF has gained about 7.59% and was up about 23.17% so far this year and in the past one year (as of 06/25/2024), respectively. RDVY has traded between $43.44 and $56.17 during this last 52-week period.
The ETF has a beta of 1.13 and standard deviation of 19.42% 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 is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $56.23 billion in assets, Vanguard Value ETF has $117.32 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.