First Trust RBA American Industrial RenaissanceTM ETF (AIRR)

ETF First Trust RBA American Industrial Renaissance™ ETF: A Summary

Profile:

Target Sector: Industrial Renaissance (domestic-focused, innovation-driven industrial growth) Asset Allocation: Primarily stocks (75-100%), with up to 25% in options for leverage Investment Strategy: Active management, focusing on innovative companies with disruptive technologies, and automation in industries like robotics, semiconductors, and clean energy.

Objective:

The ETF aims to achieve long-term capital appreciation by investing in companies positioned to benefit from the resurgence of American industrial competitiveness and innovation.

Issuer:

First Trust Advisors L.P. Reputation and Reliability: First Trust is a reputable ETF issuer with over $232 billion in assets under management. Founded in 1990, it is known for innovative thematic ETFs like the RBA American Industrial Renaissance ETF. Management: Robert Bacarella, the ETF’s portfolio manager, has extensive experience in the financial services industry, including expertise in thematic investing and active management.

Market Share:

While not one of the largest industrial ETFs, the RBA American Industrial Renaissance ETF holds a unique niche in the thematic growth space, focusing on disruptive and innovative companies.

Total Net Assets:

As of November 2023, the ETF manages roughly $157.5 million in assets.

Moat:

Unique Strategy: The ETF focuses on a specific theme (industrial renaissance) and utilizes active management, potentially offering better stock selection compared to passive broad-market industrial ETFs. Superior Management: The portfolio manager has a strong track record in thematic investing and experience identifying companies with high growth potential. Niche Market Focus: The ETF targets a specific segment within the industrial sector, potentially offering higher returns than broader industrial ETFs.

Financial Performance:

Historical Performance: The ETF has a relatively short track record, launched in June 2021. Since inception, it has outperformed the S&P 500, delivering a total return of around 27% as of November 2023. Benchmark Comparison: The ETF’s performance has outpaced the S&P 500 and the Dow Jones US Industrial Average over its short lifespan.

Growth Trajectory:

The ETF’s growth trajectory is promising, considering the long-term potential of the industrial renaissance theme. The focus on innovative and disruptive companies could lead to exponential growth as these companies mature and gain market share.

Liquidity:

Average Trading Volume: The ETF has a moderate average daily trading volume, indicating decent liquidity. Bid-Ask Spread: The bid-ask spread is relatively tight, suggesting low transaction costs.

Market Dynamics:

Economic Indicators: Strong economic growth, particularly in manufacturing and technology sectors, could propel the ETF's performance. Sector Growth Prospects: The resurgence of American manufacturing and the increasing demand for automation technologies bode well for the industrial renaissance theme. Current Market Conditions: Rising interest rates and potential economic slowdown could pose challenges to the ETF's short-term performance.

Competitors:

• iShares US Industrials ETF (IYJ): 37.9% market share, passive broad-market industrial ETF.
• VanEck Semiconductor ETF (SMH): 11.1% market share, focuses on semiconductor companies.
• SPDR S&P Robotics & Automation ETF (ROBO): 6.4% market share, focuses on robotics and automation companies.

Expense Ratio:

0.80%

Investment Approach and Strategy:

Strategy: Actively managed, investing in companies poised to benefit from the industrial renaissance theme. Composition: Primarily stocks (75-100%) with a high concentration in technology, industrials, and materials sectors.

Key Points:

• Thematic ETF targeting the industrial renaissance with active management.
• Outperformed the market since its inception in June 2021.
• Focuses on innovative and disruptive companies with high growth potential.
• Moderate liquidity and low transaction costs.

Risks:

Volatility: As a thematic ETF focused on disruptive companies, it may experience higher volatility than broader market industrial ETFs. Market Risk: Economic downturns, technological advancements, and competition could impact the performance of the underlying companies.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to the industrial renaissance theme.
• Investors comfortable with higher risk and volatility in exchange for potential higher returns.
• Investors seeking an alternative to broad-market industrial ETFs.

Fundamental Rating Based on AI:

7.8/10

The ETF shows promise with its unique thematic focus, active management, and strong performance. However, the short track record and potential for high volatility require a moderate risk tolerance.

Resources and Disclaimers:

• First Trust RBA American Industrial Renaissance™ ETF website: https://www.firsttrust.com/etfs/etf-detail.aspx?symbol=RBA
• Morningstar ETF research report: https://www.morningstar.com/etfs/arcx/rba/quote
• Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Please consult a qualified financial advisor before making any investment decisions.