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 $874.06 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. Thus, companies that fall under this category provide a stable and growth-heavy investment.
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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 1.69%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 31.50% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Smith & Wesson Brands Inc. (
SWBI Quick Quote SWBI - Free Report) accounts for about 1.17% of total assets, followed by Dick's Sporting Goods, Inc. ( DKS Quick Quote DKS - Free Report) and Tetra Tech, Inc. ( TTEK Quick Quote TTEK - Free Report) .
The top 10 holdings account for about 10.8% 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 -14.83% so far this year and is down about -8.63% in the last one year (as of 07/26/2022). In the past 52-week period, it has traded between $23.62 and $30.89.
The ETF has a beta of 1.17 and standard deviation of 31.26% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
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 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 $12.98 billion in assets, Vanguard MidCap Value ETF has $15.44 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.