Is First Trust Rising Dividend Achievers ETF (RDVY) a Strong ETF Right Now?

Making its debut on 01/07/2014, smart beta exchange traded fund First Trust Rising Dividend Achievers ETF (RDVY) provides investors 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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

The fund is sponsored by First Trust Advisors. It has amassed assets over $17.73 billion, making 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Operating expenses on an annual basis are 0.48% for RDVY, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.29%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For RDVY, it has heaviest allocation in the Financials sector --about 34.6% of the portfolio --while Information Technology and Industrials round out the top three.

Taking into account individual holdings, Kla Corporation (KLAC) accounts for about 2.77% of the fund's total assets, followed by Applied Materials, Inc. (AMAT) and Alphabet Inc. (class A) (GOOGL).

The top 10 holdings account for about 24.03% of total assets under management.

Performance and Risk

The ETF has added roughly 14.63% so far this year and is up about 8.58% in the last one year (as of 11/14/2025). In the past 52-week period, it has traded between $51.60 and $68.31

RDVY has a beta of 1.10 and standard deviation of 17.25% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 75 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 ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $70.25 billion in assets, Vanguard Value ETF has $151.24 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.04%.

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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This article originally published on Zacks Investment Research (zacks.com).

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