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Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) debuted on 11/01/2017, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.01 billion, this makes it one of the average sized ETFs in the Style Box - Mid Cap Value. SDVY is managed by First Trust Advisors. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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.
SDVY's 12-month trailing dividend yield is 2.20%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
SDVY's heaviest allocation is in the Financials sector, which is about 28.60% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
Taking into account 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) .
The top 10 holdings account for about 11.68% of total assets under management.
Performance and Risk
The ETF has added about 3.88% and is down about -9.09% so far this year and in the past one year (as of 01/10/2023), respectively. SDVY has traded between $23 and $30.69 during this last 52-week period.
The fund has a beta of 1.16 and standard deviation of 31.37% 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 $13.34 billion in assets, Vanguard MidCap Value ETF has $16.46 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?
A smart beta exchange traded fund, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) debuted on 11/01/2017, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.01 billion, this makes it one of the average sized ETFs in the Style Box - Mid Cap Value. SDVY is managed by First Trust Advisors. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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.
SDVY's 12-month trailing dividend yield is 2.20%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
SDVY's heaviest allocation is in the Financials sector, which is about 28.60% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
Taking into account 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) .
The top 10 holdings account for about 11.68% of total assets under management.
Performance and Risk
The ETF has added about 3.88% and is down about -9.09% so far this year and in the past one year (as of 01/10/2023), respectively. SDVY has traded between $23 and $30.69 during this last 52-week period.
The fund has a beta of 1.16 and standard deviation of 31.37% 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 $13.34 billion in assets, Vanguard MidCap Value ETF has $16.46 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.