Should Invesco S&P MidCap Quality ETF (XMHQ) Be on Your Investing Radar?

Core Viewpoint - The Invesco S&P MidCap Quality ETF (XMHQ) is a passively managed ETF aimed at providing broad exposure to the Mid Cap Blend segment of the US equity market, with assets exceeding $4.90 billion, making it one of the larger ETFs in this category [1]. Group 1: Mid Cap Blend Characteristics - Mid cap companies, with market capitalizations between $2 billion and $10 billion, generally exhibit higher growth prospects and lower volatility compared to large and small cap companies, offering a balance of stability and growth potential [2]. Group 2: Costs and Performance - The ETF has an annual operating expense ratio of 0.25%, which is competitive within its peer group, and a 12-month trailing dividend yield of 0.65% [3]. - XMHQ aims to match the performance of the S&P MIDCAP 400 QUALITY INDEX, with a year-to-date return of approximately 2.97% and a decline of about 1.23% over the past year as of August 1, 2025 [6]. Group 3: Sector Exposure and Holdings - The ETF has a significant allocation to the Industrials sector, comprising about 35.4% of the portfolio, followed by Financials and Healthcare [4]. - Carlisle Cos Inc (CSL) is the largest holding at approximately 4.72% of total assets, with the top 10 holdings accounting for about 28.61% of total assets under management [5]. Group 4: Risk and Alternatives - XMHQ has a beta of 1.02 and a standard deviation of 20.39% over the trailing three-year period, indicating effective diversification of company-specific risk with around 82 holdings [7]. - Alternatives to XMHQ include the Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH), which have larger asset bases and lower expense ratios of 0.04% and 0.05%, respectively [9]. Group 5: Bottom Line - Passively managed ETFs like XMHQ are favored by both institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency, making them suitable for long-term investment strategies [10].