First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)

Overview

The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) seeks investment results that correspond to the price and yield, before fees and expenses, of the NASDAQ US Rising Dividend Achievers Index. This index is composed of small and mid-cap companies that have increased their dividend payments in each of the last five years.

Reputation and Reliability

First Trust is a well-established ETF provider with a strong reputation for offering innovative and reliable investment products.

Management Expertise

First Trust has a dedicated team of investment professionals with significant experience in managing ETFs and developing index-based investment strategies.

Goal

To provide investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the NASDAQ US Rising Dividend Achievers Index.

Investment Approach and Strategy

Strategy: The ETF tracks a specific index: the NASDAQ US Rising Dividend Achievers Index.

Composition The ETF holds a basket of small and mid-cap stocks that have consistently increased their dividend payments.

Market Share: SDVY has a moderate market share within the dividend-focused small and mid-cap ETF space.

Total Net Assets (AUM): 741860000

Key Competitors

• Schwab US Dividend Equity ETF (SCHD)
• Vanguard Dividend Appreciation ETF (VIG)
• WisdomTree US SmallCap Dividend Fund (DES)

Competitive Landscape

The dividend ETF industry is highly competitive, with several large players. SDVY differentiates itself by focusing on SMID-cap companies with rising dividends, offering a different risk/return profile than large-cap dividend ETFs. However, its smaller size and higher expense ratio compared to some competitors can be a disadvantage.

Historical Performance: Historical performance data should be obtained from reliable financial sources and reviewed across various timeframes (e.g., 1-year, 3-year, 5-year, 10-year) to assess long-term returns and risk-adjusted performance.

Benchmark Comparison: The ETF's performance should be compared to the NASDAQ US Rising Dividend Achievers Index to determine how well it tracks its benchmark.

Expense Ratio: 0.59

Average Trading Volume

The average trading volume of SDVY provides adequate liquidity for most investors, typically averaging several hundred thousand shares daily.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating reasonable trading costs for investors.

Market Environment Factors

Economic growth, interest rate changes, and sector-specific trends in the small and mid-cap market segments can significantly influence SDVY's performance.

Growth Trajectory

SDVY's growth trajectory depends on its ability to attract and retain assets, which is driven by its performance relative to its benchmark and competitors. Any changes to the index methodology or holdings could also affect its growth.

Competitive Edge

SDVY's focus on SMID-cap companies with a history of rising dividends provides a unique investment proposition. This niche focus can offer higher growth potential than large-cap dividend ETFs, while still providing a stream of income. The rising dividend requirement adds a quality screen, potentially reducing the risk of dividend cuts. However, this focus also limits the investment universe and may result in higher volatility.

Volatility

SDVY's volatility is expected to be higher than that of large-cap dividend ETFs due to its focus on smaller companies.

Market Risk

The value of SDVY's holdings can fluctuate due to overall market conditions, economic downturns, and sector-specific risks affecting small and mid-cap companies. Dividend cuts from underlying holdings also pose a risk.

Ideal Investor Profile

SDVY is suitable for investors seeking a combination of income and growth from small and mid-cap stocks. It is ideal for those willing to accept higher volatility in exchange for potentially higher returns.

Market Risk

SDVY is best suited for long-term investors with a moderate risk tolerance who are looking for diversification and dividend income.

The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY) offers a focused approach to dividend investing by targeting small and mid-cap companies with a history of increasing dividends. This strategy provides a combination of income and growth potential, but also introduces higher volatility compared to large-cap dividend ETFs. SDVY is best suited for long-term investors seeking diversification and income with a moderate risk tolerance. Its performance is closely tied to the health of the small and mid-cap market segments and the consistency of dividend payouts from its holdings. Investors should carefully consider its expense ratio and compare it to similar ETFs before investing.

Data Sources:

• First Trust Website
• ETF.com
• Morningstar

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market share data is estimated and may vary depending on the source and methodology.