Should You Invest in the First Trust RBA American Industrial Renaissance ETF (AIRR)?
Sector ETF report for AIRR
Designed to provide broad exposure to the Industrials - Broad segment of the equity market, the First Trust RBA American Industrial Renaissance ETF (AIRR) is a passively managed exchange traded fund launched on 03/10/2014.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $225.14 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.70%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.06%.
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 89.40% of the portfolio, followed by Financials.
Looking at individual holdings, Encore Wire Corporation (WIRE) accounts for about 3.43% of total assets, followed by Rbc Bearings Incorporated (ROLL) and Myr Group Inc. (MYRG).
The top 10 holdings account for about 31.93% of total assets under management.
Performance and Risk
So far this year, AIRR has added roughly 24.15%, and was up about 66.21% in the last one year (as of 09/27/2021). During this past 52-week period, the fund has traded between $25.71 and $42.99.
The ETF has a beta of 1.30 and standard deviation of 32.34% for the trailing three-year period, making it a high risk choice in the space. With about 61 holdings, it effectively diversifies company-specific risk.
First Trust RBA American Industrial Renaissance ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, AIRR is a reasonable option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $5.33 billion in assets, Industrial Select Sector SPDR ETF has $17.44 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.
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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First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports
MYR Group, Inc. (MYRG): Free Stock Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
RBC Bearings Incorporated (ROLL): Free Stock Analysis Report
Encore Wire Corporation (WIRE): Free Stock Analysis Report
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