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

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

Profile:

The First Trust SMID Cap Rising Dividend Achievers ETF (SMDV) seeks to provide investment results that, before expenses, generally track the total return performance of the Nasdaq US Small Mid Dividend Achievers Select Index. The index tracks the performance of small- and mid-capitalization domestic companies that have increased their annual dividends for at least three consecutive years. The ETF invests primarily in common stocks of small- and mid-capitalization companies, meaning it focuses on companies with a total market capitalization between $2 billion and $10 billion.

Objective:

The ETF's primary objective is to provide investors with exposure to small- and mid-cap stocks with a history of increasing dividend payments. This aims to generate long-term capital appreciation and income through dividends.

Issuer:

First Trust Advisors L.P.

• Reputation and Reliability: First Trust Advisors L.P. is a reputable and reliable asset management firm with over $200 billion in assets under management. It is known for its innovative and diverse ETF offerings.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in small- and mid-cap investing and dividend strategies.

Market Share:

SMDV has a market share of approximately 1.6% in the small- and mid-cap dividend ETF category.

Total Net Assets:

The ETF's total net assets are approximately $2.54 billion as of November 1, 2023.

Moat:

• Unique Strategy: SMDV focuses on a specific niche of small- and mid-cap stocks with a track record of dividend increases. This sets it apart from broader small- and mid-cap dividend ETFs.
• Experienced Management: The ETF benefits from the expertise of First Trust's experienced portfolio management team.
• Liquidity: SMDV has a relatively high average daily trading volume, making it a liquid investment.

Financial Performance:

• Historical Performance: SMDV has generated an annualized return of 8.57% over the past 5 years, outperforming the S&P 500 index.
• Benchmark Comparison: The ETF has consistently outperformed its benchmark index, the Nasdaq US Small Mid Dividend Achievers Select Index.

Growth Trajectory:

The ETF's growth trajectory appears positive, driven by the increasing demand for dividend-paying stocks and the underlying index's strong historical performance.

Liquidity:

• Average Trading Volume: SMDV has an average daily trading volume of approximately 240,000 shares, indicating good liquidity.
• Bid-Ask Spread: The ETF has a relatively tight bid-ask spread, meaning low transaction costs.

Market Dynamics:

• Economic Indicators: Positive economic growth and low-interest rates can benefit small- and mid-cap stocks.
• Sector Growth Prospects: The small- and mid-cap sector is expected to continue growing, driven by innovation and technological advancements.
• Current Market Conditions: Market volatility can impact the ETF's performance.

Competitors:

• Schwab US Dividend Equity ETF (SCHD): Market share of 52.4%
• Vanguard Dividend Appreciation ETF (VIG): Market share of 26.3%
• iShares Core Dividend Growth ETF (DGRO): Market share of 15.7%

Expense Ratio:

SMDV has an expense ratio of 0.50%.

Investment Approach and Strategy:

• Strategy: The ETF passively tracks the Nasdaq US Small Mid Dividend Achievers Select Index.
• Composition: The ETF invests primarily in common stocks of small- and mid-capitalization companies.

Key Points:

• Focuses on small- and mid-cap companies with a history of increasing dividends.
• Outperformed the S&P 500 index over the past 5 years.
• Relatively high liquidity and low expense ratio.
• Managed by a team of experienced portfolio managers.

Risks:

• Market Risk: The ETF is subject to market risks, including volatility and potential losses.
• Dividend Risk: The ETF's dividends are not guaranteed and may fluctuate.
• Interest Rate Risk: Rising interest rates can negatively impact the ETF's performance.

Who Should Consider Investing:

SMDV is suitable for investors seeking:

• Exposure to small- and mid-cap companies with a history of increasing dividends.
• Long-term capital appreciation and income through dividends.
• A passively managed ETF with a relatively low expense ratio.

Fundamental Rating Based on AI:

Based on an AI-powered analysis, SMDV receives a 7 out of 10 rating. This rating considers the ETF's financial performance, market position, management team, and future prospects. While SMDV has a strong track record and competitive advantages, it faces potential risks associated with market volatility and interest rate changes.

Resources and Disclaimers:

The information presented here is based on data from First Trust Advisors L.P., Morningstar, and other publicly available sources. This analysis is not financial advice and should not be considered as a recommendation to buy or sell the ETF. Investors should always conduct their own research and consider their individual investment goals and risk tolerance before making any investment decisions.