Subscribe to Entrepreneur for $5

Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?

Smart Beta ETF report for SDVY

This story originally appeared on Zacks

Launched on 11/01/2017, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Value category of the market.

- Zacks

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is sponsored by First Trust Advisors. It has amassed assets over $429.92 million, making it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, SDVY seeks to match the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index.

The NASDAQ US Small Mid Cap Rising Dividend Achievers Index is composed of the securities of 100 small and mid-cap companies with a history of raising their dividends and exhibit the characteristics to continue to do so in the future.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.60% for this ETF, which makes it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 1.10%.

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.

For SDVY, it has heaviest allocation in the Financials sector --about 31.10% of the portfolio --while Industrials and Consumer Discretionary round out the top three.

Taking into account individual holdings, Signature Bank (SBNY) accounts for about 1.16% of the fund's total assets, followed by Western Alliance Bancorporation (WAL) and East West Bancorp, Inc. (EWBC).

SDVY's top 10 holdings account for about 11.25% of its total assets under management.

Performance and Risk

The ETF has gained about 28.48% so far this year and is up roughly 28.84% in the last one year (as of 12/29/2021). In the past 52-week period, it has traded between $23.65 and $30.81.

The ETF has a beta of 1.24 and standard deviation of 31.57% for the trailing three-year period. With about 100 holdings, it effectively diversifies company-specific risk.


First Trust SMID Cap Rising Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell MidCap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $15.34 billion in assets, Vanguard MidCap Value ETF has $15.73 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.

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 - Mid Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report


First Trust SMID Cap Rising Dividend Achievers ETF (SDVY): ETF Research Reports


Western Alliance Bancorporation (WAL): Free Stock Analysis Report


Signature Bank (SBNY): Free Stock Analysis Report


East West Bancorp, Inc. (EWBC): Free Stock Analysis Report


Vanguard MidCap Value ETF (VOE): ETF Research Reports


iShares Russell MidCap Value ETF (IWS): ETF Research Reports


To read this article on click here.


Zacks Investment Research