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

The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY), with $8.09 billion in assets, offers exposure to U.S. mid-cap value stocks with a focus on companies that have a history of raising dividends; the fund's largest sector allocation is Financials at 32.60%. SDVY's expense ratio is 0.59%, higher than alternatives like IWS (0.23%) and VOE (0.07%), and it has a 12-month trailing dividend yield of 2.05%; year-to-date the ETF is down -1.37% but up approximately 3.37% in the last year.

Analysis

The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) provides targeted exposure to U.S. mid-cap value equities, specifically focusing on companies with a demonstrated history of increasing dividends, and has amassed $8.09 billion in assets since its launch on November 1, 2017. The ETF tracks the NASDAQ US Small Mid Cap Rising Dividend Achievers Index, encompassing approximately 190 holdings, which aids in diversifying company-specific risk. Notably, the Financials sector constitutes the largest allocation at 32.60% of the portfolio, with the top 10 holdings representing 10.32% of total assets. SDVY's performance shows a year-to-date decline of -1.37% but an approximate gain of 3.37% over the last year, as of May 21, 2025. It exhibits a beta of 1.11 and a three-year standard deviation of 22.16%, suggesting higher volatility relative to the broader market. A significant factor for consideration is its annual operating expense ratio of 0.59%, positioning it as one of the more expensive options in its category when compared to alternatives like IWS (0.23%) and VOE (0.07%). The ETF offers a 12-month trailing dividend yield of 2.05% and currently holds a Zacks ETF Rank of 3 (Hold), indicating it is perceived as a reasonable option for investors targeting the mid-cap value style box with an emphasis on dividend growth.

Key Decisions for Investors

• Investors interested in SDVY for its focus on mid-cap companies with rising dividends should critically assess whether the unique dividend growth strategy adequately justifies its 0.59% expense ratio, which is considerably higher than peers.
• Before committing capital, a detailed comparison of SDVY against lower-cost alternatives like the iShares Russell Mid-Cap Value ETF (IWS) and the Vanguard Mid-Cap Value ETF (VOE) is recommended to evaluate potential impacts on net returns, especially considering its Zacks ETF Rank of 3 (Hold).
• The ETF's beta of 1.11 and standard deviation of 22.16% indicate a risk profile slightly above the market average; therefore, investors should ensure this aligns with their individual risk tolerance and review its modest recent performance (YTD -1.37%, 1-year +3.37%) within their portfolio context.