Is First Trust RBA American Industrial Renaissance ETF (AIRR) a Strong ETF Right Now?

Designed to provide broad exposure to the Industrials ETFs category of the market, the First Trust RBA American Industrial Renaissance ETF (AIRR) is a smart beta exchange traded fund launched on 03/10/2014.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

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.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

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 $7.46 billion, this makes it one of the largest ETFs in the Industrials ETFs. AIRR is managed by First Trust Advisors. 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.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.70% for this ETF, which makes it one of the most expensive products in the space.

It's 12-month trailing dividend yield comes in at 0.17%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

AIRR's heaviest allocation is in the Industrials sector, which is about 92.1% of the portfolio.

Looking at individual holdings, C.h. Robinson Worldwide, Inc. (CHRW) accounts for about 4.39% of total assets, followed by Comfort Systems Usa, Inc. (FIX) and Mastec, Inc. (MTZ).

The top 10 holdings account for about 35.94% of total assets under management.

Performance and Risk

The ETF has added about 11.56% so far this year and was up about 37.08% in the last one year (as of 01/15/2026). In the past 52-week period, it has traded between $61.92 and $109.69

AIRR has a beta of 1.28 and standard deviation of 24.54% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 53 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust RBA American Industrial Renaissance ETF is not a suitable option for investors seeking to outperform the Industrials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Vanguard Industrials ETF (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 ETF has $6.78 billion in assets, State Street Industrial Select Sector SPDR ETF has $27.86 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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This article originally published on Zacks Investment Research (zacks.com).

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