Designed to provide broad exposure to the Style Box - Mid Cap Value category of the market, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) is a smart beta exchange traded fund launched on 11/01/2017.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by First Trust Advisors. SDVY has been able to amass assets over $8.92 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
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 cousins, other things remaining the same.
Annual operating expenses for SDVY are 0.59%, which makes it one of the most expensive products in the space.
SDVY's 12-month trailing dividend yield is 1.86%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
SDVY's heaviest allocation is in the Financials sector, which is about 31.3% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Comfort Systems Usa, Inc. (FIX) accounts for about 1.35% of the fund's total assets, followed by Interdigital, Inc. (IDCC) and Clear Secure, Inc. (class A) (YOU).
Its top 10 holdings account for approximately 11.13% of SDVY's total assets under management.
Performance and Risk
The ETF has added roughly 6.04% and is up about 3.68% so far this year and in the past one year (as of 10/16/2025), respectively. SDVY has traded between $29.52 and $40.33 during this last 52-week period.
The fund has a beta of 1.12 and standard deviation of 20.66% for the trailing three-year period. With about 185 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) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. iShares Russell Mid-Cap Value ETF has $14.02 billion in assets, Vanguard Mid-Cap Value ETF has $19.09 billion. IWS has an expense ratio of 0.23% and VOE changes 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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First Trust SMID Cap Rising Dividend Achievers ETF (SDVY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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