A smart beta exchange traded fund, the First Trust RBA American Industrial Renaissance ETF (AIRR) debuted on 03/10/2014, and offers broad exposure to the Industrials ETFs 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.
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 & Index
Managed by First Trust Advisors, AIRR has amassed assets over $10.56 billion, making it one of the largest ETFs in the Industrials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Richard Bernstein Advisors American Industrial Renaissance Index.
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 Expenses
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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.69%.
The fund has a 12-month trailing dividend yield of 0.09%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 91.7% of the portfolio.
Taking into account individual holdings, Sterling Infrastructure, Inc. (STRL) accounts for about 5.97% of the fund's total assets, followed by C.h. Robinson Worldwide, Inc. (CHRW) and Saia, Inc. (SAIA).
AIRR's top 10 holdings account for about 39.65% of its total assets under management.
Performance and Risk
So far this year, AIRR has gained about 23.26%, and it's up approximately 42.22% in the last one year (as of 07/20/2026). During this past 52-week period, the fund has traded between $83.91 and $133.25.
The fund has a beta of 1.27 and standard deviation of 25.40% for the trailing three-year period, which makes AIRR a high risk choice in this particular space. With about 52 holdings, it effectively diversifies company-specific risk .
Alternatives
First 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 Index Fund ETF Shares (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the State Street Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials Index Fund ETF Shares has $8.12 billion in assets, State Street Industrial Select Sector SPDR ETF has $33.42 billion. VIS has an expense ratio of 0.09% and XLI changes 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 Line
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First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).