First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)SDVY

ETF First Trust SMID Cap Rising Dividend Achievers ETF (RDVY): An Overview

Profile:

First Trust SMID Cap Rising Dividend Achievers ETF (RDVY) focuses on small and mid-cap U.S. stocks with a history of increasing dividends. It seeks to provide investors with long-term capital appreciation and rising dividend income.

Objective:

The primary investment goal of RDVY is to track the SMID Cap Rising Dividend Achievers Index by investing in U.S. equity securities that have a record of increasing dividends.

Issuer:

First Trust Advisors L.P. is a leading independent provider of ETFs in the U.S.

Reputation and Reliability: First Trust has a good reputation and a long track record in managing ETFs, with over $150 billion in assets under management.

Management: The First Trust ETF portfolio management team has extensive experience and expertise in quantitative asset management, index tracking, and ETF product development.

Market Share:

RDVY holds roughly 0.1% of assets in the broader mid-cap dividend growth ETF category.

Total Net Assets:

RDVY has approximately $811 million in total net assets.

Moat:

RDVY offers a unique investment approach by focusing on rising dividend stocks from traditionally lower-dividend sectors like mid-cap companies. Additionally, its quantitative analysis framework helps identify companies with solid financial health and the potential to sustain dividend increases.

Financial Performance:

Over the last 5 years, RDVY has provided a total return of 50.97%, slightly exceeding its benchmark index, the Russell Midcap Growth Index, which returned 47.15%.

Benchmark Comparison: This indicates strong performance compared to its benchmark.

Growth Trajectory:

The small and mid-cap space, RDVY's primary focus, often displays greater dynamism and growth potential compared to larger-cap companies. This bodes well for continued positive financial performance.

Liquidity:

RDVY offers good liquidity with an average daily trading volume exceeding 100,000 shares. It also displays a relatively tight bid-ask spread, allowing investors to trade in and out of the ETF efficiently.

Market Dynamics:

RDVY's performance is significantly influenced by economic growth, interest rate changes, and investor sentiment towards small and mid-cap stocks and their expected dividend growth.

Competitors:

Key RDVY competitors include:

• Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): 18.6% market share
• iShares Core Dividend Growth ETF (DGRO): 7.34% market share
• Vanguard Dividend Appreciation ETF (VIG): 8.44% market share

Expense Ratio: 0.6%

Investment approach and strategy:

RDVY employs:

Strategy: Passive management approach, aiming to replicate the SMID Cap Rising Dividend Achievers Index.

Composition: It primarily holds US domiciled small/mid-cap stocks from various sectors with a history of increasing dividends. It currently holds roughly 219 holdings.

Key Points:

RDVY offers investors several benefits: *Exposure to small/mid-cap stocks with higher growth and dividend income potential. *Track record of outperformance compared to its benchmark. *Decent liquidity and trading cost *Focused management by a reputable provider experienced with ETFs.

Risks:

The risks associated with RDVY include:

• Volatility: Small and mid-cap stocks generally experience higher price fluctuations compared to large-cap stocks.

• Market risk: RDVY's performance is directly related to the underlying companies' performance and can be impacted negatively by specific industries or overall market downturns.

Who Should Consider Investing:

RDVY is suitable for:

• Investors seeking income and long-term capital appreciation
• Investors comfortable accepting higher volatility *Seeking exposure with a focus on dividend growers outside established sectors like financials and utilities.

Fundamental Rating Based on AI :

7.6/10

Positive Factors:

*Solid investment strategy with a well-defined focus

• Outperformance record compared to its benchmark *Above average liquidity, allowing for easier entry and exits
• Experienced and reputable manager with expertise in index tracking

Challenges:

*Relatively high expense ratio for a passively managed ETF. *Limited track record compared to other, well-established dividend index ETFs.

Resources and Disclaimers:

• First Trust SMID Cap Rising Dividend Achievers ETF Website: https://www.ftportfolios.com/ETF/FTR/0894/0/Summary
• NASDAQ Market Summary - First Trust SMID Cap Rising Dividend Achievers ETF: https://www.nasdaq.com/market-activity/funds-and-etfs/rdvy

Disclaimer: This analysis utilizes publicly available information and is meant for educational purposes only, do not consider it as financial recommendations. Please consult a licensed professional before making any financial decisions.