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Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?
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The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) made its debut on 11/01/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
SDVY is managed by First Trust Advisors, and this fund has amassed over $876.96 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Value. This particular fund 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.
Annual operating expenses for SDVY are 0.60%, which makes it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.39%.
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 30.20% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Agco Corporation (AGCO - Free Report) accounts for about 1.04% of the fund's total assets, followed by Genco Shipping & Trading Ltd (GNK - Free Report) and Magnolia Oil & Gas Corporation (MGY - Free Report) .
The top 10 holdings account for about 10.3% of total assets under management.
Performance and Risk
So far this year, SDVY has lost about -13.99%, and is down about -11.59% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $26.10 and $30.89.
SDVY has a beta of 1.21 and standard deviation of 32.07% 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 an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $13.64 billion in assets, Vanguard MidCap Value ETF has $16.12 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?
The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) made its debut on 11/01/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
SDVY is managed by First Trust Advisors, and this fund has amassed over $876.96 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Value. This particular fund 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.
Annual operating expenses for SDVY are 0.60%, which makes it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.39%.
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 30.20% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Agco Corporation (AGCO - Free Report) accounts for about 1.04% of the fund's total assets, followed by Genco Shipping & Trading Ltd (GNK - Free Report) and Magnolia Oil & Gas Corporation (MGY - Free Report) .
The top 10 holdings account for about 10.3% of total assets under management.
Performance and Risk
So far this year, SDVY has lost about -13.99%, and is down about -11.59% in the last one year (as of 05/02/2022). During this past 52-week period, the fund has traded between $26.10 and $30.89.
SDVY has a beta of 1.21 and standard deviation of 32.07% 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 an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $13.64 billion in assets, Vanguard MidCap Value ETF has $16.12 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.