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), a passively managed exchange traded fund launched on 12/01/2006.
The fund is sponsored by Invesco. It has amassed assets over $6.30 billion, making it one of the larger ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus they have a nice balance of growth potential and stability.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.92%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 33.40% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Williams-Sonoma Inc (WSM) accounts for about 4.82% of total assets, followed by Emcor Group Inc (EME) and Manhattan Associates Inc (MANH).
The top 10 holdings account for about 31.24% 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 added about 5.56% so far this year and is up roughly 21.03% in the last one year (as of 01/22/2025). In the past 52-week period, it has traded between $90.20 and $110.05.
The ETF has a beta of 1.07 and standard deviation of 21.41% for the trailing three-year period. With about 81 holdings, it effectively diversifies company-specific risk.
Alternatives
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 good 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 Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While Vanguard Mid-Cap ETF has $76.15 billion in assets, iShares Core S&P Mid-Cap ETF has $100.16 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.
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Get it free >>Invesco S&P MidCap Quality ETF (XMHQ): ETF Research Reports
EMCOR Group, Inc. (EME) : Free Stock Analysis Report
Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report
Manhattan Associates, Inc. (MANH) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
Vanguard Mid-Cap ETF (VO): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
