Should Invesco S&P MidCap Momentum ETF (XMMO) Be on Your Investing Radar?
Style Box ETF report for XMMO
Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the Invesco S&P MidCap Momentum ETF (XMMO) is a passively managed exchange traded fund launched on 03/03/2005.
The fund is sponsored by Invesco. It has amassed assets over $987.83 million, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. Thus they have a nice balance of growth potential and stability.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
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 0.33%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.41%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 24% of the portfolio. Consumer Discretionary and Financials round out the top three.
Looking at individual holdings, Gamestop Corp (GME) accounts for about 3.34% of total assets, followed by Cleveland-Cliffs Inc (CLF) and Crocs Inc (CROX).
The top 10 holdings account for about 26.11% of total assets under management.
Performance and Risk
XMMO seeks to match the performance of the S&P MIDCAP 400 MOMENTUM INDEX before fees and expenses. The S&P Midcap 400 Momentum Index is composed of securities with strong growth characteristics selected from the Russell Midcap Index.
The ETF return is roughly 17.93% so far this year and is up about 16.55% in the last one year (as of 12/31/2021). In the past 52-week period, it has traded between $77.23 and $96.52.
The ETF has a beta of 0.98 and standard deviation of 26.36% for the trailing three-year period. With about 79 holdings, it effectively diversifies company-specific risk.
Invesco S&P MidCap Momentum ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XMMO is a great option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard MidCap Growth ETF (VOT) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While Vanguard MidCap Growth ETF has $12.62 billion in assets, iShares Russell MidCap Growth ETF has $16.27 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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Invesco S&P MidCap Momentum ETF (XMMO): ETF Research Reports
ClevelandCliffs Inc. (CLF): Free Stock Analysis Report
GameStop Corp. (GME): Free Stock Analysis Report
Crocs, Inc. (CROX): Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
Vanguard MidCap Growth ETF (VOT): ETF Research Reports
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