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 Quick Quote 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 $856 million, making it one of the average sized 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. These types of companies, then, have a good balance of stability and growth potential.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They 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.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.14%.
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 31.40% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, M&t Bank Corporation (
MTB Quick Quote MTB - Free Report) accounts for about 1.26% of total assets, followed by Boise Cascade Company ( BCC Quick Quote BCC - Free Report) and Popular, Inc. ( BPOP Quick Quote BPOP - Free Report) .
The top 10 holdings account for about 11.97% 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 has lost about -5.13% so far this year and it's up approximately 3.84% in the last one year (as of 03/23/2022). In the past 52-week period, it has traded between $27.15 and $30.89.
The ETF has a beta of 1.22 and standard deviation of 31.96% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
First Trust SMID Cap Rising Dividend Achievers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SDVY is a great option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell MidCap Value ETF (
IWS Quick Quote IWS - Free Report) and the Vanguard MidCap Value ETF ( VOE Quick Quote VOE - Free Report) track a similar index. While iShares Russell MidCap Value ETF has $15.07 billion in assets, Vanguard MidCap Value ETF has $16.77 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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.