The First Trust Rising Dividend Achievers ETF (RDVY) made its debut on 01/07/2014, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $21.78 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. RDVY is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the NASDAQ US Rising Dividend Achievers Index.
The NASDAQ US Rising Dividend Achievers Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.47% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.95%.
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.
RDVY's heaviest allocation is in the Financials sector, which is about 34% of the portfolio. Its Information Technology and Industrials round out the top three.
Taking into account individual holdings, Lam Research Corporation (LRCX) accounts for about 3.46% of the fund's total assets, followed by Applied Materials, Inc. (AMAT) and Kla Corporation (KLAC).
The top 10 holdings account for about 26.29% of total assets under management.
Performance and Risk
The ETF return is roughly 6.26% so far this year and is up roughly 21.55% in the last one year (as of 05/18/2026). In the past 52-week period, it has traded between $59.43 and $75.51
RDVY has a beta of 1.02 and standard deviation of 16.51% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 74 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Rising Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value Index Fund ETF Shares (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $91.05 billion in assets, Vanguard Value Index Fund ETF Shares has $173.39 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value
Bottom Line
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First Trust Rising Dividend Achievers ETF (RDVY): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).