A smart beta exchange traded fund, the First Trust Rising Dividend Achievers ETF (RDVY) debuted on 01/07/2014, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
RDVY is managed by First Trust Advisors, and this fund has amassed over $24.4 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for RDVY are 0.47%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.85%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 37.5% 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 4.56% of the fund's total assets, followed by Applied Materials, Inc. (AMAT) and Kla Corporation (KLAC).
Its top 10 holdings account for approximately 29.24% of RDVY's total assets under management.
Performance and Risk
The ETF has gained about 15.67% and is up about 26.54% so far this year and in the past one year (as of 07/23/2026), respectively. RDVY has traded between $62.62 and $81.06 during this last 52-week period.
The ETF has a beta of 1.00 and standard deviation of 16.38% for the trailing three-year period, making it 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 $100.78 billion in assets, Vanguard Value Index Fund ETF Shares has $187.28 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).