Should You Invest in the First Trust RBA American Industrial Renaissance ETF (AIRR)?

·4 min read

Launched on 03/10/2014, the First Trust RBA American Industrial Renaissance ETF (AIRR) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Broad segment of the equity market.

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.

Sector ETFs are also funds of convenience, offering many 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 14, placing it in bottom 13%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $227.66 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.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

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

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 86.20% of the portfolio. Financials and Materials round out the top three.

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

The ETF has added roughly 26.70% so far this year and was up about 49.59% in the last one year (as of 10/19/2021). In that past 52-week period, it has traded between $26.32 and $42.99.

The ETF has a beta of 1.30 and standard deviation of 32.32% 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.

Alternatives

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 sufficient 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 $5.37 billion in assets, Industrial Select Sector SPDR ETF has $17.99 billion. VIS has an expense ratio of 0.10% and XLI charges 0.12%.

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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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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