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Is Invesco S&P SmallCap Quality ETF (XSHQ) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the Invesco S&P SmallCap Quality ETF (XSHQ - Free Report) is a smart beta exchange traded fund launched on 04/06/2017.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Invesco, XSHQ has amassed assets over $299.41 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the SmallCap 600 Quality Index.
The S&P SmallCap 600 Quality Index is composed of 120 securities in the S&P SmallCap 600 Index that have the highest quality score, which is calculated based on the average of three fundamental measures: return on equity, accruals ratio and financial leverage ratio.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.18%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 28.6% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Paycom Software Inc (PAYC) accounts for about 3.67% of total assets, followed by Qorvo Inc (QRVO) and Armstrong World Industries Inc (AWI).
The top 10 holdings account for about 21.85% of total assets under management.
Performance and Risk
So far this year, XSHQ has gained about 11.97%, and it's up approximately 14.51% in the last one year (as of 11/03/2026). During this past 52-week period, the fund has traded between $40.02 and $50.01.
XSHQ has a beta of 0.94 and standard deviation of 19.32% for the trailing three-year period. With about 118 holdings, it effectively diversifies company-specific risk .
Alternatives
Invesco S&P SmallCap Quality ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Morningstar Small-Cap ETF (VB) tracks CRSP US Small Cap Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. Vanguard Morningstar Small-Cap ETF has $79.06 billion in assets, iShares Core S&P Small-Cap ETF has $106.1 billion. VB has an expense ratio of 0.03% and IJR changes 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend
Bottom Line
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.
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Is Invesco S&P SmallCap Quality ETF (XSHQ) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the Invesco S&P SmallCap Quality ETF (XSHQ - Free Report) is a smart beta exchange traded fund launched on 04/06/2017.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Invesco, XSHQ has amassed assets over $299.41 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the SmallCap 600 Quality Index.
The S&P SmallCap 600 Quality Index is composed of 120 securities in the S&P SmallCap 600 Index that have the highest quality score, which is calculated based on the average of three fundamental measures: return on equity, accruals ratio and financial leverage ratio.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.18%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 28.6% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Paycom Software Inc (PAYC) accounts for about 3.67% of total assets, followed by Qorvo Inc (QRVO) and Armstrong World Industries Inc (AWI).
The top 10 holdings account for about 21.85% of total assets under management.
Performance and Risk
So far this year, XSHQ has gained about 11.97%, and it's up approximately 14.51% in the last one year (as of 11/03/2026). During this past 52-week period, the fund has traded between $40.02 and $50.01.
XSHQ has a beta of 0.94 and standard deviation of 19.32% for the trailing three-year period. With about 118 holdings, it effectively diversifies company-specific risk .
Alternatives
Invesco S&P SmallCap Quality ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Morningstar Small-Cap ETF (VB) tracks CRSP US Small Cap Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. Vanguard Morningstar Small-Cap ETF has $79.06 billion in assets, iShares Core S&P Small-Cap ETF has $106.1 billion. VB has an expense ratio of 0.03% and IJR changes 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend
Bottom Line
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.