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

Question

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 $8.30 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 have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 2.07%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 32.40% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking 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

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 1.12% so far this year and it's up approximately 3.84% in the last one year (as of 07/22/2025). In the past 52-week period, it has traded between $29.52 and $40.33.

Story ContinuesThe ETF has a beta of 1.09 and standard deviation of 21.43% 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 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 good 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 $13.49 billion in assets, Vanguard Mid-Cap Value ETF has $18.07 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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