First Trust to Introduce Renaissance, Income ETFs
First Trust, the ninth-largest U.S. exchange traded funds issuer, expects to introduce two new ETFs on Wednesday. Both funds will trade on the NASDAQ Stock Market.
The new ETFs are the First Trust RBA American Industrial Renaissance ETF (AIRRF) and the First Trust RBA Quality Income ETF (NasdaqGM:QINC) . Both funds track indexes developed by Richard Bernstein Advisors.
The First Trust RBA American Industrial Renaissance ETF will track the Richard Bernstein Advisors American Industrial Renaissance Index, which is comprised of mid- and small-cap industrial and community bank stocks.
“RBA believes there are increasing reasons to expect that the United States may regain industrial market share, based on a number of factors, including: access to cheap energy sources; the relative stability of the U.S. market compared to many emerging markets; and growing availability of bank financing for manufacturers,” according to a First Trust Statement.
“Smaller U.S. banks generally have strengthening balance sheets and continue to aid U.S. capital formation. Admittedly, traditional banking typically has lower profitability ratios, but smaller U.S. banks do not need massive trading infrastructures and unnecessary global risk-taking to be profitable,” according to First Trust.
First Trust has an ETF focused on mid- and small-cap banks, the First Trust NASDAQ ABA Community Bank Index Fund (QABA) , which is up more than 30% in the past year. [Community Bank ETF Looks Strong]
The First Trust RBA Quality Income ETF will track the Richard Bernstein Advisors Quality Income Index. “The index attempts to control the risks associated with investing in higher-yielding stocks, yet maintain attractive current income. RBA believes stocks with extremely high dividend yields should be viewed cautiously,” according to the statement.
“Dividend-payers have historically outperformed non-payers. Dividend payers in the S&P 500 Index have outperformed non-dividend payers in 19 out of the last 30 years since 1984,a period which included both rising and falling markets. Dividend payers had a negative return in only 3 of the 30 years versus 9 years of negative performance for the non-payers,” First Trust notes in QINC’s fact sheet.
Illinois-based First Trust bolstered its lineup of dividend offerings earlier this year with the debut of the First Trust NASDAQ Rising Dividend Achievers ETF (RDVY) .
Both new ETFs will charge 0.7% per year.
ETF Trends editorial team contributed to this post.
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