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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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
Managed by First Trust Advisors, SDVY has amassed assets over $5.46 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things 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.
The fund has a 12-month trailing dividend yield of 1.46%.
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.
Representing 33.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, California Resources Corporation (CRC - Free Report) accounts for about 1.08% of total assets, followed by Cactus, Inc. (class A) (WHD - Free Report) and Synovus Financial Corp. (SNV - Free Report) .
SDVY's top 10 holdings account for about 10.62% of its total assets under management.
Performance and Risk
The ETF has added about 12.74% so far this year and was up about 23.10% in the last one year (as of 08/01/2024). In the past 52-week period, it has traded between $26.48 and $36.69.
SDVY has a beta of 1.18 and standard deviation of 21.57% 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 Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.27 billion in assets, Vanguard Mid-Cap Value ETF has $16.90 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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
Managed by First Trust Advisors, SDVY has amassed assets over $5.46 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things 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.
The fund has a 12-month trailing dividend yield of 1.46%.
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.
Representing 33.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, California Resources Corporation (CRC - Free Report) accounts for about 1.08% of total assets, followed by Cactus, Inc. (class A) (WHD - Free Report) and Synovus Financial Corp. (SNV - Free Report) .
SDVY's top 10 holdings account for about 10.62% of its total assets under management.
Performance and Risk
The ETF has added about 12.74% so far this year and was up about 23.10% in the last one year (as of 08/01/2024). In the past 52-week period, it has traded between $26.48 and $36.69.
SDVY has a beta of 1.18 and standard deviation of 21.57% 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 Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.27 billion in assets, Vanguard Mid-Cap Value ETF has $16.90 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.