Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?

Designed to provide broad exposure to the Industrials ETFs category of the market, the First Trust RBA American Industrial Renaissance ETF (AIRR) is a smart beta exchange traded fund launched on 03/10/2014.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.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.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.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.Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.Fund Sponsor & IndexBecause the fund has amassed over $3.44 billion, this makes it one of the largest ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. This particular fund 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 ExpensesSince 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 AIRR are 0.70%, which makes it one of the most expensive products in the space.AIRR's 12-month trailing dividend yield is 0.19%.Sector Exposure and Top HoldingsEven 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.AIRR's heaviest allocation is in the Industrials sector, which is about 89.10% of the portfolio. Its Financials and Energy round out the top three.Taking into account individual holdings, Rbc Bearings Incorporated (RBC) accounts for about 3.47% of the fund's total assets, followed by Dycom Industries, Inc. (DY) and Applied Industrial Technologies, Inc. (AIT).Its top 10 holdings account for approximately 30.99% of AIRR's total assets under management.Performance and RiskYear-to-date, the First Trust RBA American Industrial Renaissance ETF has lost about -5.43% so far, and is up roughly 19.19% over the last 12 months (as of 02/27/2025). AIRR has traded between $61.64 and $86.09 in this past 52-week period.The fund has a beta of 1.26 and standard deviation of 24.40% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 53 holdings, it effectively diversifies company-specific risk.AlternativesFirst 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) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.63 billion in assets, Industrial Select Sector SPDR ETF has $21.46 billion. VIS has an expense ratio of 0.09% and XLI charges 0.08%.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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports RBC Bearings Incorporated (RBC): Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report Dycom Industries, Inc. (DY): Free Stock Analysis Report Vanguard Industrials ETF (VIS): ETF Research Reports Industrial Select Sector SPDR ETF (XLI): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks