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Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?
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Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. AIRR has been able to amass assets over $2.84 billion, making it one of the largest ETFs in the Industrials ETFs. AIRR seeks to match the performance of the Richard Bernstein Advisors American Industrial Renaissance Index before fees and expenses.
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
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.
Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the most expensive products in the space.
AIRR's 12-month trailing dividend yield is 0.24%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 86.70% of the portfolio --while Financials and Utilities round out the top three.
Taking into account individual holdings, Granite Construction Incorporated (GVA - Free Report) accounts for about 3.27% of the fund's total assets, followed by Aaon, Inc. (AAON - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) .
AIRR's top 10 holdings account for about 31.06% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF return is roughly 35.05% so far, and is up about 37.59% over the last 12 months (as of 12/23/2024). AIRR has traded between $53.73 and $86.09 in this past 52-week period.
AIRR has a beta of 1.24 and standard deviation of 24.58% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 55 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 $5.65 billion in assets, Industrial Select Sector SPDR ETF has $20.99 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?
Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. AIRR has been able to amass assets over $2.84 billion, making it one of the largest ETFs in the Industrials ETFs. AIRR seeks to match the performance of the Richard Bernstein Advisors American Industrial Renaissance Index before fees and expenses.
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
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.
Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the most expensive products in the space.
AIRR's 12-month trailing dividend yield is 0.24%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 86.70% of the portfolio --while Financials and Utilities round out the top three.
Taking into account individual holdings, Granite Construction Incorporated (GVA - Free Report) accounts for about 3.27% of the fund's total assets, followed by Aaon, Inc. (AAON - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) .
AIRR's top 10 holdings account for about 31.06% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust RBA American Industrial Renaissance ETF return is roughly 35.05% so far, and is up about 37.59% over the last 12 months (as of 12/23/2024). AIRR has traded between $53.73 and $86.09 in this past 52-week period.
AIRR has a beta of 1.24 and standard deviation of 24.58% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 55 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 $5.65 billion in assets, Industrial Select Sector SPDR ETF has $20.99 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.