Is it worth investing in the First Trust RBA American Industrial Renaissance ETF (AIRR)? – May 24, 2024

First Trust RBA American Industrial Renaissance ETF fund launched on October 3, 2014 (AIR – Free Report is a passively managed, listed fund whose task is to provide broad exposure to the stock market in the Industrials – Broad segment.

Passively managed ETFs are becoming increasingly popular among institutional and retail investors due to their low cost, transparency, flexibility and tax efficiency. They are perfect instruments for long-term investors.

Investor-friendly sector ETFs provide many opportunities to gain low risk and diversified exposure to a wide range of companies in specific sectors. Industry – Broad is one of the 16 broad Zacks Industry Sectors. It currently ranks 4th, ranking in the top 25%.

Index details

The fund’s sponsor is First Trust Advisors. It has accumulated over $1.10 billion in assets, making it one of the mid-market ETFs trying to match the performance of the Industrials-Broad segment of the equity market. AIRR seeks to match the performance of Richard Bernstein Advisors’ American Industrial Renaissance Index before fees and expenses.

Richard Bernstein Advisors’ American Industrial Renaissance Index measures the performance of U.S. small- and mid-cap companies in the industrial and community banking sectors.

Costs

Cost is an important factor when choosing the right ETF, and cheaper funds can significantly outperform their more expensive counterparts, all other fundamentals being equal.

The annual operating costs of this ETF are 0.70%, making it one of the most expensive products on the market.

Its trailing 12-month dividend yield is 0.16%.

Sector exposure and largest assets

It is important to delve into an ETF’s holdings before investing, despite the many advantages of this type of fund, such as diversified exposure that minimizes the risk of a single stock. Most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the industrial sector at approximately 91.40% of the portfolio.

Considering individual holdings, Powell Industries, Inc. (POWL – Free Report) accounts for approximately 5.52% of total assets, followed by Comfort Systems Usa, Inc. (TO FIX – Free Report) and Emcor Group, Inc. (EME – Free Report).

The 10 largest holdings account for approximately 41.04% of total assets under management.

Performance and risk

The year-to-date return of the First Trust RBA American Industrial Renaissance ETF is approximately 23.89% so far, and over the last 12 months (as of May 24, 2024) it has increased by approximately 47.73%. Over the last 52 weeks, AIRR has traded between $46.95 and $72.01.

The ETF has a beta of 1.24 and a standard deviation of 23.71% for the trailing three-year period, making it a high-risk pick in this space. It has approximately 48 farms and has more concentrated exposure than comparable farms.

Alternatives

The First Trust RBA American Industrial Renaissance ETF carries a Zacks ETF Rank of 2 (Buy), which is based on asset class expected return, expense ratio and momentum, among other factors. For this reason, AIRR is a great option for investors looking for exposure to the industrial ETF market. There are other additional ETFs on the market that investors may also consider.

Vanguard Industrials ETF (VIS – Free Report) tracks the MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF Index (XLI – Free Report) tracks the Industrial Sector Index. The Vanguard Industrials ETF has $5.31 billion in assets and the Industrial Select Sector SPDR ETF has $18.31 billion. The VIS expense ratio is 0.10% and the XLI fees are 0.09%.

Bottom line

To learn more about this product and other ETFs, find products that match your investment goals, and read articles on the latest developments in the world of ETF investing, visit the Zacks ETF Center.

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