For investors seeking momentum, Invesco S&P MidCap Low Volatility ETF (XMLV - Free Report) is probably on the radar now. The fund just hit a 52-week high and is up nearly 12.2% from its 52-week low price of $42.05/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed.
XMLV in Focus
The fund tracks the performance of nearly 80 of the least volatile stocks from the S&P MidCap 400 Index over the past 12 months. Real Estate (24.22%), Utilities (22.78%) and Financials (14.12%) are the top three sectors. The product charges 25 bps in fees (see Mid Cap ETFs here).
Why the Move?
Mid-caps are an often-overlooked investing option. These securities are viewed as big and safe compared to the highly volatile small-cap exposure. But when compared to the stability of large caps, these are relatively risky bets.
Mid-cap stocks are more domestically-focused than large caps and are thus less exposed to geopolitical risks and negative currency translations. Also, after the recent solid rally, most small-cap ETFs are trading at a rich valuation now. Such overvaluation concerns have probably led investors toward this low-volatility, mid-cap ETF.
More Gains Ahead?
It seems that the fund will perform decently in the near term given a positive weighted alpha of 9.00.
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