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

Making its debut on 11/01/2017, smart beta exchange traded fund First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) provides investors broad exposure to the Style Box - Mid Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.

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

SDVY is managed by First Trust Advisors, and this fund has amassed over $8.73 billion, which makes it one of the larger ETFs in the Style Box - Mid Cap Value. Before fees and expenses, SDVY 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

With one of the most expensive products in the space, this ETF has annual operating expenses of 0.59%.

It has a 12-month trailing dividend yield of 1.96%.

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.

This ETF has heaviest allocation in the Industrials sector - about 31.3% of the portfolio. Financials and Consumer Discretionary round out the top three.

Story ContinuesLooking at individual holdings, Woodward, Inc. (WWD) accounts for about 1.11% of total assets, followed by Comfort Systems Usa, Inc. (FIX) and Northern Trust Corporation (NTRS).

The top 10 holdings account for about 10.12% of total assets under management.

Performance and Risk

The ETF has added roughly 6.47% so far this year and is up roughly 12.98% in the last one year (as of 08/14/2025). In the past 52-week period, it has traded between $29.52 and $40.33

SDVY has a beta of 1.11 and standard deviation of 21.35% 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 $13.8 billion in assets, Vanguard Mid-Cap Value ETF has $18.65 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 Reports

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

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