There are a lot of dividend ETFs out there to choose from, but this segment of the marketplace is fairly concentrated. Of the 170 ETFs categorized as dividend ETFs by ETFdb.com, just a dozen have more than $2 billion in assets. In other words, just a handful of dividend ETFs get most of the attention. That’s kind of a shame because there are a number of solid, high performing dividend ETFs with relatively small asset bases that are just as strong, if not stronger, that aren’t getting a lot of notice.

One of those funds is the First Trust Rising Dividend Achievers ETF (RDVY). At 3½ years old, the fund has roughly $250 million in assets. While that’s a solid asset base, it doesn’t put it anywhere in the neighborhood of the biggest dividend ETF offerings from the likes of Vanguard or BlackRock. It’s not for a lack of performance though. Over the past three years, the fund has returned 12.1% per year compared to a 10.7% average annual return for the S&P 500, a track record that’s earned the fund a 5-star rating in Morningstar’s large cap value category.

So, what gives? Why hasn’t the fund grown larger than it has? I have a few theories.

Low Dividend Yield

A lot of investors look to dividend ETFs for income. This has especially been the case with many bonds and Treasuries still yielding very little. These investors want higher yields than they can find in the fixed income markets and, quite simply, the Rising Dividend Achievers ETF doesn’t have it.

Its 30-day yield of 1.3% just isn’t going to interest many investors. The quarterly dividend fluctuates as you’d expect with a dividend ETF, but even over its entire history, the fund has never really been a big payer. Even at its highest, the dividend yield has topped just 2% only for a short period. Despite its strong total return, investors interested in just the dividend probably won’t be satisfied.

Only Modest Dividend Growth Histories

The title of “dividend achiever” inspires thoughts of companies with long histories of paying and growing their dividends. One might think they’re getting a portfolio of dividend aristocrats with this fund, but that’s actually not the case. The dividend requirements for qualifying for RDVY are much more relaxed. Therefore, the portfolio is filled with names with only recent histories of dividend growth. Top holding Boeing (BA) has been growing its dividend like gangbusters lately, but from 2009 to 2011, the dividend was flat. Huntington Ingalls Industries (HII) only started paying a dividend in 2012. Same for Apple (AAPL). Lam Research (LRCX) started in 2014.

RDVY looks for companies that paid a dividend in the trailing twelve-month period greater than the dividend paid in the trailing twelve-month period three and five years prior. While long-term dividend payers would certainly qualify, it opens the doors for many companies who have only recently started consistently growing their dividends. RDVY also layers on screens for earnings growth, cash-to-debt and payout ratios, so it tries to include only companies that can be reasonably expected to continue growing their dividend, but the history for many companies is limited at best.

Risk-Adjusted Returns Are Just Average

While total returns have topped the S&P 500 over the past several years, it’s also taken on more risk to achieve them. Looking at the standard deviation of daily historical returns, RDVY looks to be about 17% more risky than the S&P 500, which actually outweighs the excess return the fund has achieved over that time. The fund’s three-year alpha is negative which means the fund is actually underperforming on a risk-adjusted basis.

Also, the expense ratio of RDVY is 0.50%. That’s not egregiously high, but it does put it at a disadvantage compared to most S&P 500 index funds and some of the biggest dividend ETFs in the marketplace.

Conclusion

This fund is probably better suited to those seeking total return instead of dividend income since the 1.3% yield is probably a non-starter for most. RDVY has a solid history of delivering for shareholders so long as they’re comfortable with the fact that they’ll be taking on more risk. I still prefer more conservative higher yielding options such as the PowerShares S&P 500 High Dividend Low Volatility ETF (SPHD) or the Vanguard High Dividend Yield ETF (VYM).