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Should First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Be on Your Investing Radar?
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If you're interested in broad exposure to the Mid Cap Value segment of the US equity market, look no further than the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) , a passively managed exchange traded fund launched on 11/01/2017.
The fund is sponsored by First Trust Advisors. It has amassed assets over $4.22 billion, making it one of the larger ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 1.74%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 33.40% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Alpha Metallurgical Resources, Inc. (AMR - Free Report) accounts for about 1.05% of total assets, followed by Century Communities, Inc. (CCS - Free Report) and Winnebago Industries, Inc. (WGO - Free Report) .
The top 10 holdings account for about 10.16% of total assets under management.
Performance and Risk
SDVY seeks to match the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index before fees and expenses. 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.
The ETF return is roughly 4.50% so far this year and was up about 35.62% in the last one year (as of 05/09/2024). In the past 52-week period, it has traded between $25.23 and $34.82.
The ETF has a beta of 1.19 and standard deviation of 21.81% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SDVY is a reasonable option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) track a similar index. While iShares Russell Mid-Cap Value ETF has $12.77 billion in assets, Vanguard Mid-Cap Value ETF has $16.25 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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Should First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Be on Your Investing Radar?
If you're interested in broad exposure to the Mid Cap Value segment of the US equity market, look no further than the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) , a passively managed exchange traded fund launched on 11/01/2017.
The fund is sponsored by First Trust Advisors. It has amassed assets over $4.22 billion, making it one of the larger ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 1.74%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 33.40% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Alpha Metallurgical Resources, Inc. (AMR - Free Report) accounts for about 1.05% of total assets, followed by Century Communities, Inc. (CCS - Free Report) and Winnebago Industries, Inc. (WGO - Free Report) .
The top 10 holdings account for about 10.16% of total assets under management.
Performance and Risk
SDVY seeks to match the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index before fees and expenses. 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.
The ETF return is roughly 4.50% so far this year and was up about 35.62% in the last one year (as of 05/09/2024). In the past 52-week period, it has traded between $25.23 and $34.82.
The ETF has a beta of 1.19 and standard deviation of 21.81% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SDVY is a reasonable option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell Mid-Cap Value ETF (IWS - Free Report) and the Vanguard Mid-Cap Value ETF (VOE - Free Report) track a similar index. While iShares Russell Mid-Cap Value ETF has $12.77 billion in assets, Vanguard Mid-Cap Value ETF has $16.25 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.