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Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?
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Launched on 11/01/2017, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Value category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
The fund is managed by First Trust Advisors. SDVY has been able to amass assets over $920.88 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
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.
Annual operating expenses for this ETF are 0.60%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDVY, it has heaviest allocation in the Financials sector --about 29.50% of the portfolio --while Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Dick's Sporting Goods, Inc. (DKS - Free Report) accounts for about 1.29% of the fund's total assets, followed by Williams-Sonoma, Inc. (WSM - Free Report) and Ufp Industries Inc. (UFPI - Free Report) .
Its top 10 holdings account for approximately 11.68% of SDVY's total assets under management.
Performance and Risk
The ETF has lost about -14.74% so far this year and is down about -15.19% in the last one year (as of 11/10/2022). In the past 52-week period, it has traded between $23 and $30.89.
The fund has a beta of 1.17 and standard deviation of 30.98% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust SMID Cap Rising Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $12.63 billion in assets, Vanguard MidCap Value ETF has $15.48 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.
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Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?
Launched on 11/01/2017, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Value category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
The fund is managed by First Trust Advisors. SDVY has been able to amass assets over $920.88 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
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.
Annual operating expenses for this ETF are 0.60%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDVY, it has heaviest allocation in the Financials sector --about 29.50% of the portfolio --while Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Dick's Sporting Goods, Inc. (DKS - Free Report) accounts for about 1.29% of the fund's total assets, followed by Williams-Sonoma, Inc. (WSM - Free Report) and Ufp Industries Inc. (UFPI - Free Report) .
Its top 10 holdings account for approximately 11.68% of SDVY's total assets under management.
Performance and Risk
The ETF has lost about -14.74% so far this year and is down about -15.19% in the last one year (as of 11/10/2022). In the past 52-week period, it has traded between $23 and $30.89.
The fund has a beta of 1.17 and standard deviation of 30.98% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust SMID Cap Rising Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $12.63 billion in assets, Vanguard MidCap Value ETF has $15.48 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.