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), a passively managed exchange traded fund launched on 11/01/2017.
The fund is sponsored by First Trust Advisors. It has amassed assets over $8.09 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, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. 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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 0.59%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.05%.
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 32.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Interdigital, Inc. (IDCC) accounts for about 1.15% of total assets, followed by Perdoceo Education Corporation (PRDO) and Paycom Software, Inc. (PAYC).
The top 10 holdings account for about 10.32% 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 -1.37% so far this year and it's up approximately 3.37% in the last one year (as of 05/21/2025). In the past 52-week period, it has traded between $29.52 and $40.33.
The ETF has a beta of 1.11 and standard deviation of 22.16% for the trailing three-year period. With about 190 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) and the Vanguard Mid-Cap Value ETF (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $13.33 billion in assets, Vanguard Mid-Cap Value ETF has $17.75 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 Reports InterDigital, Inc. (IDCC): Free Stock Analysis Report Paycom Software, Inc. (PAYC): Free Stock Analysis Report Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports Perdoceo Education Corporation (PRDO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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