Should First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) Be on Your Investing Radar?

Launched on November 1, 2017, the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) is a passively managed exchange traded fund designed to provide a 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 $11.90 billion, making it one of the largest 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. These types of companies, then, have a good balance of stability and growth potential.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

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

Annual operating expenses for this ETF are 0.58%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 0.92%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 35.5% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, National Healthcare Corporation (NHC) accounts for about 1.21% of total assets, followed by Pricesmart, Inc. (PSMT) and Enersys (ENS).

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 return is roughly 17.77% so far this year and is up about 26.02% in the last one year (as of 08/05/2026). In the past 52-week period, it has traded between $36.12 and $44.94.

The ETF has a beta of 1.01 and standard deviation of 18.62% for the trailing three-year period. With about 174 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 Index Fund ETF Shares (VOE) track a similar index. While iShares Russell Mid-Cap Value ETF has $15.94 billion in assets, Vanguard Mid-Cap Value Index Fund ETF Shares has $24.05 billion. IWS has an expense ratio of 0.23% and VOE charges 0.05%.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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