Is First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) a Strong ETF Right Now?

Launched on 11/01/2017, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Value category of the market.

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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is sponsored by First Trust Advisors. It has amassed assets over $8.04 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. SDVY, before fees and expenses, seeks to match the performance of the NASDAQ US Small Mid Cap Rising Dividend Achievers Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.59% for SDVY, making it one of the most expensive products in the space.

It's 12-month trailing dividend yield comes in at 2.06%.

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.

For SDVY, it has heaviest allocation in the Financials sector --about 32.60% of the portfolio --while 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).

SDVY's top 10 holdings account for about 10.32% of its total assets under management.

Performance and Risk

So far this year, SDVY has lost about -2.21%, and is up roughly 5.80% in the last one year (as of 06/13/2025). During this past 52-week period, the fund has traded between $29.52 and $40.33.

The ETF has a beta of 1.10 and standard deviation of 21.93% 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 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 $13.15 billion in assets, Vanguard Mid-Cap Value ETF has $17.70 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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This article originally published on Zacks Investment Research (zacks.com).

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