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Should First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Be on Your Investing Radar?
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The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) was launched on 11/01/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.44 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
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus they have a nice balance of growth potential and stability.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks 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.
Costs
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 1.88%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Amkor Technology, Inc. (AMKR - Free Report) accounts for about 1.33% of total assets, followed by Cadence Bank (CADE - Free Report) and Pultegroup, Inc. (PHM - Free Report) .
The top 10 holdings account for about 12.02% 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 0.89% so far this year and was up about 16.47% in the last one year (as of 03/06/2024). In the past 52-week period, it has traded between $24.91 and $33.23.
The ETF has a beta of 1.19 and standard deviation of 22.01% for the trailing three-year period. With about 99 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 $13.61 billion in assets, Vanguard Mid-Cap Value ETF has $16.71 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.
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Should First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Be on Your Investing Radar?
The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) was launched on 11/01/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.44 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
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus they have a nice balance of growth potential and stability.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks 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.
Costs
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 1.88%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Amkor Technology, Inc. (AMKR - Free Report) accounts for about 1.33% of total assets, followed by Cadence Bank (CADE - Free Report) and Pultegroup, Inc. (PHM - Free Report) .
The top 10 holdings account for about 12.02% 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 0.89% so far this year and was up about 16.47% in the last one year (as of 03/06/2024). In the past 52-week period, it has traded between $24.91 and $33.23.
The ETF has a beta of 1.19 and standard deviation of 22.01% for the trailing three-year period. With about 99 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 $13.61 billion in assets, Vanguard Mid-Cap Value ETF has $16.71 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.