If you're interested in broad exposure to the Mid Cap Blend segment of the US equity market, look no further than the Invesco S&P MidCap Quality ETF (
XMHQ Quick Quote XMHQ - Free Report) , a passively managed exchange traded fund launched on 12/01/2006.
The fund is sponsored by Invesco. It has amassed assets over $287.41 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.37%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.51%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 31.70% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Williams-Sonoma Inc (
WSM Quick Quote WSM - Free Report) accounts for about 3.65% of total assets, followed by East West Bancorp Inc ( EWBC Quick Quote EWBC - Free Report) and Cognex Corp ( CGNX Quick Quote CGNX - Free Report) .
The top 10 holdings account for about 23.88% of total assets under management.
Performance and Risk
XMHQ seeks to match the performance of the S&P MIDCAP 400 QUALITY INDEX before fees and expenses. The S&P MidCap 400 Quality Index is designed to provide equal-weighted exposure to approximately 800 securities of medium-sized companies in the larger US equity market.
The ETF has lost about -21.47% so far this year and is down about -13.92% in the last one year (as of 06/21/2022). In the past 52-week period, it has traded between $62.01 and $83.73.
The ETF has a beta of 0.98 and standard deviation of 27.42% for the trailing three-year period. With about 79 holdings, it effectively diversifies company-specific risk.
Invesco S&P MidCap Quality ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, XMHQ is a sufficient option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap ETF (
VO Quick Quote VO - Free Report) and the iShares Core S&P MidCap ETF ( IJH Quick Quote IJH - Free Report) track a similar index. While Vanguard MidCap ETF has $45 billion in assets, iShares Core S&P MidCap ETF has $54.62 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%. Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit
Zacks ETF Center.