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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) debuted on 03/10/2014, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $1.42 billion, this makes it one of the larger ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.15%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 89.50% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Mueller Industries, Inc. (MLI - Free Report) accounts for about 3.41% of total assets, followed by Granite Construction Incorporated (GVA - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .
AIRR's top 10 holdings account for about 31.64% of its total assets under management.
Performance and Risk
The ETF has added roughly 22.76% and was up about 33.57% so far this year and in the past one year (as of 08/20/2024), respectively. AIRR has traded between $46.95 and $74.69 during this last 52-week period.
The fund has a beta of 1.23 and standard deviation of 24.23% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 60 holdings, it effectively diversifies company-specific risk.
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 $5.38 billion in assets, Industrial Select Sector SPDR ETF has $19.27 billion. VIS has an expense ratio of 0.10% and XLI charges 0.09%.
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?
A smart beta exchange traded fund, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) debuted on 03/10/2014, and offers broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $1.42 billion, this makes it one of the larger ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.70%.
It's 12-month trailing dividend yield comes in at 0.15%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 89.50% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Mueller Industries, Inc. (MLI - Free Report) accounts for about 3.41% of total assets, followed by Granite Construction Incorporated (GVA - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .
AIRR's top 10 holdings account for about 31.64% of its total assets under management.
Performance and Risk
The ETF has added roughly 22.76% and was up about 33.57% so far this year and in the past one year (as of 08/20/2024), respectively. AIRR has traded between $46.95 and $74.69 during this last 52-week period.
The fund has a beta of 1.23 and standard deviation of 24.23% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 60 holdings, it effectively diversifies company-specific risk.
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 $5.38 billion in assets, Industrial Select Sector SPDR ETF has $19.27 billion. VIS has an expense ratio of 0.10% and XLI charges 0.09%.
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.